Case: Duncans Industries Ltd Vs. State of U.P and others

2. Briefly stated, the facts leading to the controversy in question are as followsIndia Ltd., a company registered under the Companies Act, 1956 executed an agreement of said dated 11.11.1993 wherein it agreed to transfer on an ?as is where is? basis and ?as a going concern? its fertilizer business of manufacturing, marketing, distribution and sale of urea fertilizer in favour of CHand Chhap Fertilizer and Chemicals Ltd. (hereinafter referred to asCCFCL?) also a company incorporated under the Companies Act, 1956 which company has since been renamed as M/s. Duncans Industries Limited, Fertilizer Division, Kanpur Nagar (the appellant herein) for a total sale consideration of Rs. 70 crores which was termed as ?slump price? in the agreement. The said agreement also stated that the vendor would on the ?transfer date? transfer the fertilizer business by actual delivery of possession of the CCFCL in respect of such of the estates and properties mentioned in the agreement as were capable of being transferred by actual and/or constructive delivery and in respect of the estates requiring transfer by execution of necessary documents vesting the title thereof in CCFCL, and it was further agreed and declared that the ownership in respect of the assets and properties comprised in the ?fertilizer business? to be transferred as per the agreement, would be deemed to be vested in CCFCL on and from the ?transfer date? which, according to the agreement means 1.12.1993 or such other date as may be agreed to by and between ICI India and CCFCL. The term ?fertilizer business? was defined to mean and include the following other propertiesDemised land being plot Nos. 2B and 5 and theportion of plot No. 2 demarcated and admeasuring in the aggregate an area of 243.4387 acres equivalent to 9,85,159.50 sq. mtrs. Being the unshaded portion shown on the plan annexed hereto together with the buildings and structures thereon forming part of the fertilizer business on as the Transferfreehold land and residential building thereon with the namesituate at plot No. 4/284, Parbati Bangla Road, Kanpur comprising 94 residentiald land and residential building thereon with the namesituate at Navasheel Apartments, 56 Cantonment, Kanpur comprising a Guest House on the ground floor and 3 residential flats on the firstPlant and machinery relating to the fertilizer business including the Ammonia Manufacturing Plants, the Captive power plant and all other movable capital assets including vehicles, furniture,y systems, pipelines, railway siding etc., as on the Transfer Date and wheresoever situate, all of which relate exclusively to the Fertilizer Business and are owned and in the possession of ICI or are owned by ICI but in the lawful possession of any third party for and on behalf ofPursuant to the said agreement, a deed of conveyance dated 9.6.1994 was executed by the said ICI in favour of CCFCL, on the presentation of the said Conveyance Deed for registration. Themade a reference to the Collector under Sectionof the Stamp Act, 1899 (hereinafter referred to asAct?) stating that in the document under reference all the details required under Section 27 of the Act had not been given by the parties, hence valuation and examination is essential and reques ted the Collector to determine the value as required under the Act and the Rules and to take action to realise the deficit stamp duty and penalty. Consequent upon this reference made by thethe Collector after necessary inquiry as per his order dated 20.2.1995 referred to above, levied stamp duty and penalty to which reference has already been made. Being aggrieved by the said order of the Collector, the appellant preferred a revision petition to the Chief Controlling Revenue Authority who, as already stated, by his order dated 9.6.1994 set aside the penalty and modified the duty payable to Rs. 36,68,08,887.50 which order came to be challenged before the High Court unsuccessfully.Before the High Court the appellant had challenged the authority of theto make a reference to the Collector on the ground that there was no material to entertain any ?reason to believe? that the market value of the property which was theof the conveyance deed had not been truly set forth in the instrument. The High Court negatived the said contention after considering the arguments of the appellant in details, and before us no argument, has been advanced on this score.

Court's reasoning:
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 appellanthave 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 in 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 clearly 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.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 for the purpose of t he Act.