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M/S STRONG CONSTRUCTION THRU' PARTNER S.N. SINGH versus STATE OF U.P. THRU' FINANCE SECY. REVENUE & FINANCE & ORS.

High Court of Judicature at Allahabad

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M/S Strong Construction Thru' Partner S.N. Singh v. State Of U.P. Thru' Finance Secy. Revenue & Finance & Ors. - WRIT - C No. 35096 of 2004 [2005] RD-AH 816 (21 March 2005)

 

This is an UNCERTIFIED copy for information/reference. For authentic copy please refer to certified copy only. In case of any mistake, please bring it to the notice of Joint Registrar(Copying).

HIGH COURT OF JUDICATURE OF ALLAHABAD

A.F.R.

Court No.10.

Civil Misc. Writ Petition No.35096 of 2004.

M/S Strong Construction Versus State of U.P. and others.                                                

CONNECTED WITH-        

1. Civil Misc. Writ Petition No.54924 of 2004.

M/S Strong Construction Versus State of U.P. and others

&

2. Civil Misc. Writ Petition No.41505 of 2004.

M/S Adarsh Constructions Versus State of U.P. and others

&

3. Civil Misc. Writ Petition No.56188 of 2004.

M/S Kailash Enterprises and others Versus State of U.P. and others.

&

4. Civil Misc. Writ Petition No. 47949 of 2004

M/s Ashok Kumar and Co. Versus State of U.P. and others.

&

5. Civil Misc. Writ Petition no. 613 of 2005

M/S Shashi Construction Co. Versus State of U.P. and another.

&

6. Civil Misc. Writ Petition No.614 of 2005

M/S Chittra Associate Versus State of U.P. and another.

&

7. Civil Misc. Writ Petition No. 615 of 2005.

Grish Chand, Contractor Versus State of U.P. and another.

&

8. Civil Misc. Writ Petition No.225 of 2005

M/S Raj Construction and Developers Versus State of U.P. and others.

&

9. Civil Misc. Writ Petition No.1122 of 2005

M/S J.P. Yadava Versus State of U.P. and others.

&

10. Civil Misc. Writ Petition No.987 of 2005

MS Wood Hill Engineer & Building Versus State of U.P. and others.

&

11. Civil Misc. Writ Petition No. 991 of 2005

M/S S.S. & Brothers & Another Versus State of U.P. and others.

&

12. Civil Misc. Writ Petition 1694 of 2005

M/s Brahmdeen and another Versus State of U.P. and others.

&

13. Civil Misc.Writ Petition No. 2435 of 2005

M/s Lal Chand and Co. and another Versus State of U.P. and others.

&

14. Civil Misc.Writ Petition No. 2521 of 2005

M/S Shubham Builders Versus State of U.P. and others.

&

15.Civil Misc. Writ Petition No. 2523 of 2005

M/s K.P. Constructions co. Versus State of U.P. and others.

&

16. Civil Misc. Writ Petition No. 2391 of 2005

M/s Garg  Electric Store Versus State of U.P. and others.

&

17. Civil Misc. Writ Petition No. 2861of  2005

M/s Shree G. Enterprises Versus State of U.P. and another.

&

18. Civil Misc. Writ Petition No. 3057 of 2005                                                  

M/s Garg and Company Versus State of U.P. and others.

&

19. Civil Misc. Writ Petition No. 2987 of 2005

Rajveer Singh Versus State of U.P. and others.

&

20. Civil Misc. Writ Petition No. 3275 of 2005

M/s Gaurav Builders Press Colony and others Versus State of U.P. and others.

&

21. Civil Misc. Writ Petition No. 3612 of 2005

M/s Virendra Kumar Versus State of U.P. and another.

&

22. Civil Misc. Writ Petition No. 42275 of 2004                                                                                                                                                                                                                  

Deepak Kumar Versus General Manager U.P. Power Corpn. and others.

&

23. Civil Misc. Writ Petition No. 3711 of 2005

M/s Muskat Traders Versus State of U.P. and another .

&

24. Civil Misc. Writ Petition No. 3967 of 2005

M/s Strong Construction Versus State of U.P. and others.

&

25. Civil Misc. Writ Petition No. 42282 of 2004

M/s Deepak Kumar Versus The General Manager U.P. Power Corpn. and another.

&

26. Civil Misc. Writ Petition No. 4684 of 2005

M/s Ideal Construction Co. Versus State of U.P. and others.

&

27. Civil Misc. Writ Petition No. 4717 of 2005

M/s Sincere Construction Versus State of U.P. and others.

&

28. Civil Misc. Writ Petition No. 4686 of 2005

Mahesh Kumar Versus State of U.P. and others.

&

29. Civil Misc. Writ Petition No.4020 of 2005

M/s Hamvant Kumar Singh and others Versus State of U.P. and others.

&

30. Civil Misc. Writ Petition No. 4685 of 2005

M/s Arya Construction Company Versus State of U.P. and others.

&

31. Civil Misc. Writ Petition No.38500  of 2004

M/s Ram Asre Gupta Versus State of U.P. and others.

&

32. Civil Misc. Writ Petition No. 54925 of 2004

Dinesh Kumar Keshari Versus State of U.P. and others.

&

33. Civil Misc. Writ Petition No. 374 of 2005

M/s J.K.K. Builders Versus State of U.P. and another.

&

34. Civil Misc. Writ Petition No.1362 of 2005

M/s Jyoti Build Tech  Versus State of U.P. and another.

&

35. Civil Misc. Writ Petition No. 2202 of 2005

Rajesh Kumar Versus State of U.P. and others.

&

36. Civil Misc. Writ Petition No.3183 of 2005

M/s Gulshan Rai Jain Versus State of U.P. and others.

&

37. Civil Misc. Writ Petition No.1476 of 2005

Shri Daya Ram Versus State of U.P. and another.

&

38. Civil Misc. Writ Petition No.4962 of 2005

M/s Awadh Builders and others  Versus State of U.P. and others.                          

&

39. Civil Misc. Writ Petition No. 5209 of 2005

M/s Brahmdeen and sons and another Versus State of U.P. and others.

&

40. Civil Misc. Writ Petition No. 5358 of 2005

M/s Brahmdeen and sons and another  Versus State of U.P. and others.

&

41. Civil Misc. Writ Petition No.5285 of 2005

M/s Kumar & Co. and another Versus State of U.P. and others.

&

42. Civil Misc. Writ Petition No. 5253 of 2005

Sandeep Kumar and another Versus State of U.P. and others.

&

43. Civil Misc. Writ Petition No.5768 of 2005

M/s Swati Construction Versus State of U.P. and another.

&

44. Civil Misc.Writ Petition No.5680 of 2005

M/s Arora Builders Versus State of U.P. and another.

&

45. Civil Misc. Writ Petition No. 6136 of 2005

M/s Sanjay Kumar Singh and others Versus State of U.P. and others.

&

46. Civil Misc. Writ Petition No. 6312 of 2005

M/s Shree Jee Construction  Versus State of U.P. and others.

&

47.Civil Misc.Writ Petition No. 6784 of 2005

R.G. Builder  Versus State of U.P. and others.

&

48. Civil Misc.Writ Petition No. 6850 of 2005

M/s Amit Ghawdhary Versus State of U.P. and others.

&

49. Civil Misc.Writ Petition No. 6853 of 2005

M/s Ahmad Saeed Siddiqui  Versus State of U.P. and others.

&

50. Civil Misc. Writ Petition No. 7004 of 2005

M/s Ambar Electrical Works Versus State of U.P. and others.

&

51. Civil Misc.Writ Petition No. 6730 of 2005

M/s Inamur Rehman Versus State of U.P. and others.

&

52. Civil Misc. Writ Petition No. 8519 of 2005

M/s Verma and Co. Versus State of U.P. and another.

&

53. Civil Misc. Writ Petition No. 8546 of 2005

M/s Sanjay Electricals Versus State of U.P. and another

&

54. Civil Misc. Writ Petition No. 8553 of 2005

M/s Shyam Kumar Versus State of U.P. and others.

&

55. Civil Misc. Writ Petition No. 6735 of 2005

M/s Beekam Singh and Co. Versus State of U.P. and others.

&

56.  Civil Misc. Writ Petition No. 9199 of 2005

M/s B.M.G. Construction and Co. Versus State of U.P. and others.

&

57.  Civil Misc.Writ Petition No. 9598 of 2005

M/s Chitra Associates & others. Versus State of U.P. and another.

&

58.  Civil Misc. Writ Petition No. 9605 of 2005

M/s Vishnu Saran & Co. and another Versus State of U.P. and others.

&

59.  Civil Misc.Writ Petition No. 10440 of 2005

M/s Girish Chand, Contractor and Co. Versus State of U.P. and another.

&

60.  Civil Misc.Writ Petition No. 10349 of 2005

M/s Anand Build tech Pvt. Ltd. Versus State of U.P. and another.

&

61.  Civil Misc. Writ Petition No. 11092 of 2005

Madan  Mohan  Dubey Versus State of  U.P. and another.

&

62.  Civil Misc. Writ Petition No. 11094 of 2005

Yogesh Babu Agarwal Versus State of U.P. and another.

&

63.  Civil Misc. Writ Petition No. 11681 of 2005

Rajesh Kumar Katiyar & others Versus State of U.P. and others.

&

64.  Civil Misc. Writ Petition No. 11695 of 2005

M/s Agrawal  Electric Co. Versus State of U.P. and others.

&

65.  Civil Misc. Writ Petition No. 12290 of 2005

M/s J.P. Yadav and another Versus State of U.P. and others.

&

66.  Civil Misc. Writ Petition No. 12288 of 2005

M/s Jyoti Build Tech Pvt. Ltd. Versus State of U.P. and others.

&

67.  Civil Misc. Writ Petition No. 12306 of 2005

M/s Raj Associates & others Versus State of U.P. and others.

&

68.  Civil Misc. Writ Petition No. 13717 of 2005

M/s Bharat Construction Co. Versus State of U.P. and others.

&

69.  Civil Misc.Writ Petition No. 13359 of 2005

M/s Karuna Enterprises Versus State of U.P. and others.

&

70.  Civil Misc. Writ Petition No. 13607 of 2005

M/s Dahyia Constructions Versus State of  U.P. and others.

&

71.   Civil Misc. Writ Petition No. 13766 of 2005

M/s Dahyia Constructions Thru. Prop. Versus State of U.P. and another.

&

72.   Civil  Misc. Writ Petition No. 13701 of 2005

M/s Ankur Builders Versus State of U.P. and another.

&

73.  Civil Misc. Writ Petition No. 13633 of 2005

M/s Bajrang Builder Versus State of U.P. and others.

&

74.  Civil Misc. Writ Petition No. 14088 of 2005

M/s Sukhmani Builders Versus State of U.P. and others.

&

75.  Civil Misc. Writ Petition No. 14081 of 2005

Mr. Ramesh Chandra Verma Versus State of U.P. and another.

&

76. Civil Misc. Writ Petition No. 14109  of 2005

M/s Bargoti Construction and others Versus State of U.P. and another.

&

77. Civil Misc.Writ Petition No. 14862 of 2005

M/s Milestone Corporation & another Versus State of U.P. and others.

&

78.  Civil Misc. Writ Petition No. 14890 of 2005

M/s Ideal Construction Co. and Supplier Versus State of U.P. and others.

&

79.  Civil Misc. Writ Petition No. 14893 of 2005

M/s Shashi Construction Co. Versus State of U.P. and another.

&

80. Civil Misc. Writ Petition No. 15128 of 2005

Sri S. N. Singh and Company Versus State of U.P. and others.

&

81. Civil Misc. Writ Petition No. 12555 of f 2005

M/S Sincere Construction Versus State of U.P. and others.

&

82.  Civil Misc. Writ Petition No. 16818  of 2005

M/s Ashoka Builders and others Versus State of U.P. and another.

&

83.  Civil Misc. Writ Petition No. 16520 of 2005

M/s R. S. Enterprises Versus State of U.P. and others.

&

84. Civil Misc. Writ Petition No. 16497 of 2005

M/s  Mahesh Kumar (Contractor) Versus State of U.P. and others.

&

85.  Civil Misc. Writ Petition No. 18803 of 2005

M/s Narayan Das Versus State of U.P. and others.

&

86.  Civil Misc. Writ Petition No. 12548  of 2005

M/s Rama Construction  Versus  State of U.P. and others.

&

87. Civil Misc. Writ Petition No. 12551 of 2005

M/s  Santosh Kumar Versus State of U.P. and others.

&

88.   Civil Misc. Writ Petition No. 19152 of 2005

M/s Anand Traders Versus State of U.P. and others.

&

89.   Civil Misc.Writ Petition No. 19153 of 2005

M/s Ajai Construction Co. Versus State of U.P. and others.

&

90.  Civil Misc.Writ Petition No. 19151  of 2004

M/s Lord Shiva Shiv Construction  Versus State of U.P. and another.  

&

91. Civil Misc.Writ Petition No.8071 of 2005.

Vipin Bihari Vyas Versus State of U.P. and another.

                            ----------------

 

Hon'ble A.K.Yog,J.

Hon'ble B.B.Agarwal,J.

(Delivered by Hon'ble A.K.Yog, J.)

Aforementioned Writ Petitions, listed in bunch as connected cases,  on their pleadings, raise a common legal question, viz. 'what 'Stamp Duty' is chargeable on 'security' deposit in pursuance of a term and condition of an  'agreement' to ensure performance of work-contract in question executed between concerned respective parties in the above  Writ- Petition? '  In other words-whether a document/deed furnishing security, as above,  should be treated as 'mortgaged deed' under section 2(17) or a security deed under Article 57 (b) of Schedule 1-B, Indian Stamp Act, 1899 (as amended in State of U.P), called the Act.  

Learned counsels for the parties join in making statement that facts of each case need not be referred and in all the cases only one question of law (as noted above) arises for adjudication by this Court. In the above  circumstances, it is not insisted by them to file Counter and Rejoinder Affidavits in each case. None raised objection on all these cases being heard together and decided finally by a common judgement on the basis of the record (as it stands).  

We shall, therefore, primarily refer to the facts of the case of M/S Strong Construction Versus State of U.P. and others-which is treated as-leading case to appreciate the issue in hand which this Court is called upon to adjudicate in the above cases.

Petitioner/s, known as Government Contractors, filed tender/s to to take and execute contract work under scheme, called PMGSY. It is not disputed that the competent authority accepted tender filed by the petitioner/s.

The Executive Engineer, Temporary Division (PMGSY), PWD, Kaushambi, Allahabad vide impugned order dated 23.8.2004/Annexure 1 to the Writ Petition demanded stamp duty on the 'security' deposits in the form of FDR/NSC/Bank Guarantees as per terms and conditions of contract- agreement treating it as Mortgage Deed which is chargeable under Article 40 of Schedule I-B of the Act. Being aggrieved petitioner/s have filed above-Writ-Petition under Article 226, Constitution of India and  claimed following reliefs-

"(a) issue a writ, order or direction in the nature of certiorari quashing the order dated 23-8-2004 (Annexure 1 to this Writ Petition) passed by respondent no.4;

(b) Issue a writ, order or direction in the nature of mandamus commanding the respondents to charge Stamp duty on security amount on the basis of Article 57 Schedule I-B of the Indian Stamp Act 1899;

(c) Issue any other suitable writ, order or direction which this Hon'ble court may deem just and proper in the facts and circumstances of the case'

(d) Award the costs of this writ petition. "

Learned counsel, representing the petitioners, submit that 'money security', given under a particular  term/condition of an agreement to ensure performance of contract, by no stretch of imagination can be treated as 'Mortgage-deed'; it is pure and simple a security-deed under Article 57 (b) of Schedule 1-B of the Act; facts of the cases before the Court are  identical and that the 'legal question' raised and required to be decided in these cases has already been answered by this Court in the case of Tajveer Singh and others Versus State of U.P. and others 1997(2) AWC 1029 (DB).

Relevant extract of the aforesaid judgement reads-

"The respondents invited tenders for constructing drains, culvert etc., in response to which petitioners submitted their tenders. As per terms of the tender, tenderors, whose tenders are accepted have to deposit two per cent of the contract amount as earnest money and ten per cent of the contract amount as security deposit, which were liable to be refunded if the work is completed within the prescribed time.  However, if the tenderors fail to complete the work within the specified time, the said amount was liable to be forfeited petitioners' tenders were accepted.  An intimation to that effect was given to them by a letter dated 24.6.1994.  By the same letter the petitioners were required to make security deposit and also to supply non-judicial stamps for execution of the appropriate deed containing the offer of the said amount as security.  In paragraph 4 of the writ petition, it has been stated that on the basis of the Government instructions the respondents are demanding the stamp duty from the petitioners on the security deposit at the rate of Rs.125 per thousand, if the deposit is made in cash and at the rate of Rs.62.50 per thousand if the deposit is made in terms of N.S.C. or F.D.R. Being aggrieved by the direction contained in the said letter, requiring them to deposit the stamp duty, the petitioners have filed this Writ Petition.

2. We have heard the learned counsel for the petitioners and the learned standing counsel.

3. A  Special Bench of this court in M/s. Hindustan Sugar Mills Ltd. V. State of U.P. and others, AIR 1972 All. 8, has laid down that a security bond is chargeable with a duty under Article 57 Schedule of the Stamp Act. A special Bench of Delhi High Court in Chief Controlling Revenue Authority V. Marshall Produce Brokers Pvt. Ltd. AIR 1980 Del. 249 has held that "  the amount of security deposit paid for due performance of the contract of lease is chargeable under Article 57, Schedule 1B. " Recently a Division bench of this Court in Sripal Goel v. Deputy Director, Construction, Civil Miss. Writ petition No.38837 of 1995 , decided on 18.3.1996 has reiterated the same principle, holding that stamp duty on such an agreement is to be paid under Article 57, Schedule 1 B of the Stamp Act.  The position is thus settled that a security deed is chargeable with duty under Article 57 of Schedule 1 B.

4. The Supreme Court in Board of Revenue V. A.M. Ansari, AIR 1976 SC 1813, has laid down that the sum, which is offered as security is not a mortgage and, therefore, is not liable to stamp duty under Article 35 (C) of the Stamp Act. In this case a full Bench decision of this Court in Rishideo Sondhi v. Dhampur Sugar Mills, AIR 1947 All. 190, wherein it was held that an instrument in which specific amount is offered as security is not a mortgage deed, was cited with approval.

5. This writ petition is accordingly allowed. The impugned order, so far as it demands stamp duty from the petitioners on security deposit is quashed. The respondent will be free to realise the stamp duty, if not already, from the petitioners under Article 57, Schedule 1B of the Stamp Act as amended by the State of U.P.  In view of the facts and circumstances of the case, there shall be no order as to costs. "

It is admitted at the bar that Special Leave Petition against the judgement in the case of Tajveer (supra)  has been dismissed as time barred (see para 6 of the counter affidavit). Another Special Leave Petition against  judgement in some other case is said to be pending before Apex Court.  There is no statement in the counter affidavit nor any of the counsels pointed out that there is interim order in the aforesaid case pending before the Apex Court.

Learned counsel for the petitioner then placed reliance upon the decision in the case of Mohd. Farman v. State of U.P. and others 2001 (2) AWC 899 decided by a Division Bench of which one of us (A.K.Yog, J. ) was  member; relevant para 7 to 12 of the judgement,  are reproduced-

"7. Learned standing counsel has submitted 'written arguments' stating that the only question ; to be adjudicated in the case is -whether the security bond/deposit is chargeable with stamp duty as per Article 57 of Schedule 1B or under Article 40 of Schedule 1B? In the written argument, learned  standing counsel points out that this very question has already been referred by a learned single judge in Writ Petition No.25706 of 1999, M/S Sharma Build-tech, ( Pvt. ) Ltd. V. State of U.P. and others, vide order dated 30th June, 1999. It appears that this controversy had arisen in large number of writs filed in the Court and one of such case, being Writ Petition No.47964, has been referred to a larger bench.

8. Perusal of the referring order indicates that the Court was considering the scope and extent of Government Order dated April 1, 1999, issued by Principal Secretary , Tax and Institutional Fiancées, U.P. government. the learned Single judge has referred to the derision of Tajveer Singh and others V. State of U.P. and others, 1997 (2) AWC  1029, we well as Supreme court decision in Board of Revenue V. A.M. Ansari, AIR 1976 SC 1813.

The learned single judge ( S.R.Singh, J.) observed:

" The answer to the question is interwoven with the interpretation of the term 'mortgage deed' as defined in Section 2(17) of the Act and interaction of Article 40 with Article 57 of Schedule 1B of the Act as well as terms and conditions of contract as stipulated in the tender notice. In Tajveer Singh ( supra) a Division Bench has placed reliance on Supreme court decision in A.M.Ansari and held " the position is thus settled that the security deed is chargeable with duty under Article 57 of Schedule 1B. I have my reservations about the correctness of the proposition laid down by the Division Bench in the case aforestated. As a matter of fact, the view so taken by the Division Bench purports to be based on Supreme Court decision in A.M.Ansari ( supra) but to me, it appears that the Supreme Court decision in A.M. Ansari is not intended to law down the proposition  that in each and every case stamp duty on security as per the deed of agreement to be executed for due performance of contract is chargeable with duty under Article 57 of Schedule 1B only.  In the case of A.M. Ansari, the question that begged consideration before the Supreme Court was ' as to whether the security deposits made by the respondents savoured of the nature of mortgages so as make the respondents liable to pay the stamp duty under Article 35 C of Court after noticing the definition of 'Mortgage Deed' as embodied in Section 2(17) of the Act held bearing in mind clause (1&) of the said notice in that case thus " there is nothing in the above clause to indicate that any right over or in the security deposit was created in favour of the State Government."

Further the learned single judge observed:

"On a careful consideration of the decision in A.M. Ansari, it  would transpire that in case, any right over or in the security deposits is created in favour of the State Government, in that event, the instrument may be termed as 'Mortgage Deed' leviable to stamp duty under Article 40 of Schedule 1B and by that reckoning the Government order dated April 1, 1999 being Annexure -3 to the writ petition, cannot be discounted.  In the above perspective, therefore, it would be in the fitness of things if a larger Bench is constituted to delve into the question."

Learned Single Judge referred the matter to larger bench in view of Government Order dated April 1, 1999 (referred to above). This contingency, however, doe snot arise in the  present case singe as the Government Order dated April 1, 1999 ( annexed as Annexure -3 to the writ Petition No. 25706 of 1999, M/s Sharma Buld-tech (Pvt.) Ltd. V. State of U.P. and others, was not in existence when the demand order dated 15th February, 1996, ( impugned in the present petition) was issued.

9. The justify the imposition of stamp duty under Article 40, Schedule 1B of the Act and to establish that under its terms-reading the document as a whole-renders the security deposit- a mortgage as defined under relevant Act, it was incumbent upon the respondents to file a copy of the agreement in question to satisfy the Court that th deed in question required deposit of security, and though refundable, it is covered by the definition 'mortgage'. This has not been done. respondents have miserably failed to bring on record even by way of pleading a simple fact that deed in question requiring deposit of security is in effect a mortgage and, therefore, their stand requiring stamp duty under Article 40, Schedule 1B is justified.

10. There is nothing on record of this case, as it stands today, to indicate that the any interest is being created in the security amount as such and the deed sought to be executed between the parties is in the nature of mortgage deed.  The respondents have failed to support their claim of charging higher stamp duty under Article 40, Schedule 1B of the Indian Stamps Act vide impugned order dated 15th February, 1996 ( Annexure 1 to the writ petition).

11. In absence of the above, decision in the case of Tajveer Singh and others, squarely applies to the facts of the present case.

12. Our view is supported by the judgement and order dated 18th March, 1996, passed by Division Bench comprising B.M. Lal and R.K.Mahajan, JJ., in the case of M/s Shri Pal Goel V. Deputy Director (Construction), Rajya Krishih Utpadan Mandi Parishad, U.P. and others (copy filed as Annexure -2 to the Writ Petition No.31866 of 1996)."

Petitioners also referred to a Division Bench judgement of this Court in Writ Petition No. 40007 of 2003, M/S Maa Durga Builders Versus State of U.P. and others.  In this case also Division Bench of this Court answered the question in hand following the ratio laid down in the case of Tajveer Singh (supra). The 'Division Bench' in the case of M/s Maa Durga Builders (supra) quashed Government Order dated 12.4.1999. True copy of the said judgement in the case of Maa Durga Builders (supra) dated 22.9.2003 is Annexure 6 to the above mentioned Writ Petition No.41505 of 2004- M/S Adarsh Constructions Versus State of U.P. and others whereas copy of the aforementioned Government Order dated 12.4.1999 is  Annexure 4 to the said  Writ Petition by M/S Maa Durga Builders.

Learned counsel for the petitioner/s drew our notice to the impugned order dated 23.8.2004/Annexure 1 to the leading Writ Petition to demonstrate that the said impugned order dated 23.8.2004 require the petitioners to pay Stamp Duty treating 'security deposit' to be chargeable with Stamp Duty under Article 40 of the Act.  He submits that even though the order dated 23.8.2004 does not specifically refer to Article 40 of Schedule 1B of the Stamp Act but it clearly mentions that Stamp Duty was chargeable at the rate of Rs.70/- per thousand on security deposits of FDRs and NSCs.  Learned counsel for the petitioner/s contends that the impugned order dated 23.8.2004 Annexure 1, and other like orders, in the connected Writ petitions cannot be sustained and liable to be quashed since similar Government Order dated 12-4-1999 has already been quashed by this Court in the case of M/S Maa Durga Builders and Special Leave Petition in one of the similar matters in Apex Court has also been dismissed.

We have compared the Government Order dated 12.4.1999 (Annexure 4 to the one of the above connected petition filed by M/S Adarsh Construction (supra) and that impugned order dated  23.8. 2004/Annexure 1 to the leading writ petition and find that they are in contents and its effect, same and identical. Under both the above orders contractors are required to pay Stamp Duty treating the documents under Article 40 Schedule 1B of the Stamp Act.

In view of the judgement of Tajveer Singh (supra) and that of M/s Maa Durga Builders, referred to above (Annexure 6 to the Writ Petition filed by M/S Adarsh constructions (supra) cannot be sustained and apparently illegal, arbitrary and without justification in as much as similar orders have already been quashed by this Court in the aforesaid cases.    

The Respondents, on the other hand, vide Para 9 to 24 of the Counter Affidavit taken objection that the petitioners have not filed copies of 'agreements' in question.

We cannot overlook the fact that 'copy of Agreement/contract' deed should be with the respondent authority (who invite and accept tenders) and therefore, in all fairness,  the respondents should have filed the same.

This Court does not expect State and officers to play hide and seek or to exploit litigants who are at much disadvantageous position as compared to it.  Respondents are expected to contest in law courts with clean hands and behave as 'model' State prompt to dispense justice without taking shelter of technicalities or undue advantage of handicap of its adversaries in law Court.

We also express our concern that learned Standing Counsel did not follow rule of 'pleadings'. Counter Affidavit (sworn by R.N. Shukla, the then Deputy Commissioner Stamp, Allahabad) is contrary to the requirement of Chapter XXII Rule 2, Rules of Court  which specifically provides that "..........application/petition shall set out concisely in numbered paragaraphs the facts upon which the applicant relies and the grounds upon which the court is asked to issue a direction, order or writ, and shall conclude with a prayer stating clearly ........."

It is a basic principle that pleadings should refer to facts and facts alone and in no case make argumentative averments. The counter-affidavit in this case is in chaste breach of the above rule.

Learned Standing counsel, representing the respondents, submitted that security furnished under agreement in question is a "mortgage deed" as defined under Section 2(17) of the Stamp Act.

Relying upon the said provision it is argued, that Article 40 Schedule 1B is attracted and hence it shall require duty chargeable as on a mortgage deed.

Learned counsel for the respondents also referred to Article 12-A of Schedule 1B providing for Stamp -Duty chargeable under the Act upon a 'Bank Guarantee'.

Learned counsel for the petitioner in reply, however, referred to  Article 57 (b) Schedule 1B laying emphasis upon the expressions "security Bond" and "in any other case" used therein.

To appreciate rival contention/s and ready reference, relevant provisions of the Stamp Act re reproduced:

"2(17) "Mortgaged-deed"-"Mortgage-deed" included every instrument whereby, for the purpose of securing money advanced, or to be advanced, by way of loan, or on existing or future debt or the performance of an engagement, one person transfers, or creates to, or in favour of, another, a right over or in respect of specified property;".                

"SCHEDULE 1-B

              [STAMP DUTY ON INSTRUMENTS UNDER THE INDIAN STAMP

               ACT, 1899, AS AMENDED UP-TO-DATE IN ITS APPLICATION TO

                                                       UTTAR PRADESH                                                

_____________________________________________________________________

Description of Instrument Proposed Stamp-duty                                                                                                                                                                                                                                                                                                                                                                                          

______________________________________________________________________

1 to 12.............

12-A Bank Guarantee, Guarantee deed     Fifty rupees]

    executed by a Bank as a security to

    secure the due performance of a contract

    or the due discharge of a liability for every

    Rs. 1,000 or part thereof.                                                                                                                                                                                                                                                                                                      

13 to 39........

40.Mortgage-Deed  not being an

    agreement relating to Deposit of Title-

    deeds, Pawn or Pledge ( No.6),

    Bottomry Bond ( No.16), Mortgaged

    of  a Crop ( No.41), Respondentia

    Bond ( No.56) or Security Bond

    (No.57)-

   (a) When possession of the                   The same duty as a Conveyance

         property or any part of the               [(No.23 clause (a))] for a

         property comprised in such               consideration equal to the

        deeds is given by the mortgagor       amount secured by such deed.

        or agreed to be given

   (b) when possession is not given           The same duty as a Bond (No 15)

         or agreed to be given as afore-           for amounts secured by such

         said.                                                     deeds

         Explanation .........

    (c) When a collateral or  auxiliary                       [Ten rupees]

         or additional or substituted

         security, or by way of further

         assurance for the above-

         mentioned purpose where

         the principal or primary

         security is duly stamped for

         every sum secured not exceeding

         Rs.1,000.

         and for every Rs.1,000 or part                               [Ten rupees]

         thereof secured in excess of

         Rs.1,000.

         Exemptions .........

41. to 56..........

57. Security Bond or  Mortgage-deed

     executed by way of security for the

     due execution of an office, or to

     account for money or other property

     received by virtue thereof, or

     executed by a surety to secure the

     due performance of a contract or

     the due discharge of a liability-

    (a)............................

    (b) in any other case.                                                   [One hundred rupees]"

According to the learned Standing counsel case of the petitioner falls  within the ambit of  the expression 'performance of an engagement........'.

Expression 'engage', as per Blacks Law Dictionary, apart from other meanings, defined "to employ or involve one's self; to take part in'.  

In our considered opinion, above definition ( quoted from Dictionary) of the word 'Engage' is relevant in the contest in which the said expression is used in the statute. Execution of an 'agreement' by a contractor and submission of  security to ensure completion of contract work, has no  trace of 'engagement', within the expression ''performance of an engagement" employed in Section 2(17) of the Act. Security required in the instant case, clearly falls under Section 57 (b) Schedule 1 B.

We are in full agreement with the view taken by this Court.  We are  not inclined to take a view-different than the view expressed in earlier     Division Bench judgements of this Court noted earlier.

We are of considered view that the insistence on the part of the respondents/State not to demand Stamp Duty on 'security deposit' under  Article 57 (b) Schedule 1-B ignoring High Court judgement (as noted above) is breach of declaration of law by High Court amounting to abuse of power and to over-reach 'rule of law' which cannot be approved.  In the circumstances, it may constitute contempt of Court. State is bound by law declared by High Court, and expected not to harass its subjects and compel the petitioners to run to this Court particularly when State Government has all the means and resources to have taken guidance and expert legal opinion- as it has large contingent of State counsels and above all Advocate General.

Uncalled for insistence and causal approach in issuing impugned orders-without justifying on any valid ground on record before us-ignoring that similar orders have been set-aside/over-ruled by this Court in the past- shows that State authorities casually spend public money on frivolous  litigation and burden Courts with uncalled for State sponsored litigation.

We hope that in future State Government shall ensure not to generate frivolous litigation.

In the result, demand by the respondents to charge stamp duty vide impugned order in leading case (and other similar orders in connected Writ petitions noted above)  is illegal and arbitrary.

Consequently, a writ of certiorari is issued calling to the record of the case and we quash the impugned order dated 23-8-2004/Annexure 1 to the Writ Petition in leading Writ Petition and also other similar orders in above-noted connected writ Petitions.  

We also issue a writ of  Mandamus commanding the respondents not to compel the Petitioners and similarly situate persons, whether they have filed writ petition or not, to pay Stamp Duty on security deposit in question treating as 'mortgage deed' and further to charge Stamp Duty on such 'securities' as provided under Article 57 (b) Schedule 1B of the Act.  

Writ Petition/s stand allowed subject to above directions.

No order as to costs.

22.3.2005

RPS


Copyright

Reproduced in accordance with s52(q) of the Copyright Act 1957 (India) from judis.nic.in, indiacode.nic.in and other Indian High Court Websites

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