Case: Duncans Inds Ltd Vs. State Of Up

A Deed of Conveyance dated 9.6.1994 executed by a company named ICI India Ltd. in favour of Chand Chhap Fertilizer and Chemicals Ltd. when presented for registeration, the concerned Registrar referred the said document under Sectionof the Stamp Act to the Collector complaining of theof Section 27 of the said Act and praying for proper valuation to be made and to collect the stamp duty and penalty payable on the said document. The Collector after inquiry levied a stamp duty of Rs. 37,01,26,832.50 and a penalty of Rs. 30,53,167.50. The said order came to be challenged by the aggrieved party in a revision under Section 56 of the Stamp Act before the Chief Controlling Revenue Authority in Stamp Revision No.and the said Revisional Authority as per his order dated 4.4.1995 partly allowed the challenge and so far as the imposition of penalty was concerned the same was set aside and slightly modified the stamp duty levied by the Collector. Consequent to the order of the Revisional Authority, the appellant herein became liable to pay stamp duty o the said Deed of Conveyance amount to Rs. 36,68,08,887.50. This order of the Revisional Authority came to be challenged before the High Court in Civil Misc. Writ Petition No. 9170/95 which came to be dismissed and as against this order of the High Court of Judicature at Allahabad dated 7.7.1997, the appellant has preferred the above civil appeal.

Court's reasoning:
8. Considering the question whether the plant and machinery in the instant case can be construed as immovable property or not, the High Court came to the conclusion that the machineries which formed the fertilizer plant, were permanently embedded in the earth with an intention of running the fertilizer factory and while embedding these machineries the intention of the party was not to remove the same for the purpose of any sale of the same either as a part of a machinery or scrap and i the very name of the user of these machineries, it was necessary that these machineries be permanently fixed to the ground. Therefore, it came to the conclusion that these machineries were immovable property which were permanently attached to the land in question. While coming to this conclusion the learned Judge relied upon the observation found in the case of Reynolds v. Ashby and Son, 1904 AC 466 and Official Liquidator v. Sri Krishna Deo and others, AIR 1959 All. 247 . We are inclined to agree with the above finding of the High Court that the plant and machinery in the instant case are immovable properties. The question whether a machinery which is embedded in the earth is movable property or an immovable property, depends upon the facts and circumstances of each case. Primarily, the court will have to take into consideration the intention of the parties when it decided to embed the machinery whether such embedment was intended to be temporary or permanent. A careful perusal of the agreement of sale and the conveyance deed along with the attendant circumstances and taking into consideration the nature of machineries involved clearly shows that the machineries which have been embedded in the earth to constitute a fertilizer plant i the instant case, are definitely embedded permanently with a view to utilise the same as a fertilizer plant. The description of the machines as seen in the Schedule attached to the deed of conveyance also shows without any doubt that they were set up permanently in the land in question with a view to operate a fertilizer plant and the same was not embedded to dismantle and remove the same for the purpose of sale as machinery at any point of time. The facts as could be found also show that the purpose for which these machines were embedded was to use the plant as a factory for the manufacture of fertiliser at various stages of its production. Hence, the contention that these machines should be treated as movables cannot be accepted. Nor can it be said that the plant and machinery could have been transfered by delivery of possession on any date prior to the date of conveyance of the title to the land. Mr. Verma, in support of his contention that the machineries in question are not immovable properties, relied on a judgment of this Court in Sirpur Paper Mills Ltd. v. Collector of Central Excise, Hyderabad 1998 1 SCC 400. In the said case, this Court while considering the leviability of excise duty onmachines, based n the facts of that case, came to the conclusion that the machineries involved in that case did not constitute immovable property. As stated above, whether a machinery embedded in the earth can be treated as movable or immovable property depends upon the facts and circumstance of each case. The Court considering the said question will have to take into consideration the intention of the parties which embedded the machinery and also the intention of the parties who intend alienating those machinery. In the case cited by Mr. Verma, this Court in para 4 of the judgment had observed thus : "In view of this finding of fact, it is not possible to hold that the machinery assembled and erected by the appellant at its factory site was immovable property as something attached to earth like a building or a tree. The Tribunal has pointed out that it was for the operational efficiency of the machine that it was attached to earth. If the appellant wanted to sell themachine it could always remove it from its base and sell it."9. From the above observations, it is clear that this Court has decided the issue in that case based on the facts and circumstances pertaining to that case hence the same will not help the appellant in supporting its contention in this case where after perusing the documents and other attending circumstances available in this case, we have come to the conclusion that the plant and machinery in this case cannot but be described as an immovable property. Hence, we agree with the High Court on this point.10.The next question for consideration is whether the vendor did transfer the title of the plant and machinery in the instant case by the conveyance deed datedhave carefully considered the said judgment and, in our opinion, that judgment does not in any manner lay down the law in absolute terms that a court cannot look into prior agreements while considering the intention of the parties for finding out what actually is the property that is conveyed under the deed under consideration. It is again based on facts of that case that this Court came to the conclusion therein that the so called terms and conditions which were found in an earlier agreement were not intended to be incorporated in the subsequent document. This is clear from the following observations of this Court appearing in Para 10 of the said judgmentthe language used i the Assignment Deed, it is not possible to come to the conclusion that the terms and conditions of the earlier transaction have been made a part of that Deed. Further barring one particular agreement, other agreements were not before the Court. Therefore, it is not possible to know what the terms and conditions of those agreements were. Before the terms and conditions of an agreement can be said to have been incorporated into another document, the same must clear show that the parties thereto intended to incorporated them. No such intention is available in this case.Hence we are of the opinion that this judgment also does not help the appellant in his attempt to convince us that we should not take into consideration the recitals in the agreement dated 11.11.1993 while considering the conveyance deed of 9.6.1994.13. For the reasons stated above, we are of the considered opinion that the vendor as per the conveyance deed dated 9.6.1994 has conveyed the title it had not only in regard to the land in question but also to the entire fertilizer business in "as is where is" condition including the plant and machinery standing on the said land. Therefore, the authorities below were totally justified in taking into consideration the value of these plant and machineries along with the value of the land forthe purpose of theis based on this approach of the learned Counsel appearing for the appellant that the High Court did not go into the question of valuation. However, since the learned Counsel for the appellant did question the correctness of the valuation made by the authorities below, we have heard the argument addressed in this regard. We have also heard the arguments on behalf of the State on this score.15. The question of valuation is basically a question of fact and this Court is normally reluctant to interfere with the finding on such a question of fact if it is based on relevant material on record. The main objection of the appellant is regard to the valuation arrived at by the authorities is that the Collector originally constituted an Enquiry Committee consisting of the Assistant Inspector General (Registration), General Manager, District Industries Centre,and the Tehsildar. After the report was submitted by thefor the reasons of its own, the Collector reconstituted the said Enquiry Committee by substituting Additional City Magistrate in place ofThis substitution of the Enquiry Committee, according to the appellant, is without authority of law. We are unable to accept this contention, Constitution of an Enquiry Committee by the Collector is for the purpose of finding out the true market value of the property conveyed under the Deed. In this process, the Collector has every authority in law to take assistance from such source as is available, even if it amounts to constituting or reconstituting more than one Committee. That apart, the appellant has not been able to establish any prejudice that is caused to it by reconstitution of theCommittee. We have perused that part of the report of the Collector in which he has discussed in extenso the various materials that were available before the Committee and also the report of the valuers appointed for the purpose of finding out the value of the plant and machinery. These valuers are technical person who have while valuing the plant and machinery taken into consideration all aspects of valuation including the life of the plant and machinery. The valuations made both the Enquiry Committee as well as the valuers are mostly based on the documents produced by the appellant itself. Hence, we cannot accept the argument that the valuation accepted by the Collector and confirmed by the revision authority is either not based on any material or a finding arrived at arbitrarily. Once we are convinced that the method adopted by the authorities for the purpose of valuation is based on relevant materials then this Court will not interfere with such a finding of fact. That apart, as observed above, even the counsel for the appellant before the High Court did not seriously challenge the valuation and as emphasised by the High Court, right so. Therefore, we do not find any force in the last contention of the appellant also.