Common Judgment:

1. Heard learned counsel for the Petitioner and learned AGP for Respondent-State.

2. By above petitions, the Petitioner-Developer is challenging the Orders dated 18.12.2010 passed by the Chief Controlling Revenue Authority, Maharashtra State, Pune (Respondent No.2) rejecting/dismissing Appeal Nos. 1 of 2010 and 2 of 2010 filed by the Petitioner, confirming the orders dated 30.10.2009 passed by the Collector of Stamp, Borivali adjudicating documents dated 20.08.1987 and 27.03.1987 and charging stamp duty of Rs.5,11,300/- and Rs.11,39,400/- with 2% penalty in both cases.

3. Admittedly, the said two agreements are executed by Bombay Veerashaiva Co-operative Housing Society Limited in favour of the Petitioner-Developer in respect of two pieces of land, which were taken for development by the Petitioner.

BACKGROUND

4. The Petitioner is a Builder and Developer & it is a registered partnership firm. As part of development activity, the Petitioner entered into the aforesaid development agreements with the said society for development of the property. According to Petitioner, the said society is the owner of plots bearing Survey No. 441, Hissa No. 5 and Survey No. 442, Hissa Nos. 1, 2 and 3 situated at Chincholi Bundar Road, Malad (West), Taluka Borivali, Mumbai. According to Petitioner, it agreed to construct residential flats for members of the said society. At the time of executing the development agreements, it did not require registration. Bombay Stamp Act, 1958 (‘the said Act’, for short) was subsequently amended to add Article 5 (g-a). That the original development agreements went missing during the monsoon deluge and therefore, a police complaint was lodged and thereafter, its xerox copies were lodged with Respondent No. 1 for adjudication in September 2008. That as per the said agreements, 60% residential flats were to be retained by members of the society and remaining 40% of the flats was to be retained by the Petitioner for sale to different purchasers of the Petitioner's choice. That every agreement entered by and between the Petitioner-Developer and third-party purchasers of respective flats and shops is registered and stamp duty has been paid.

5. According to Petitioner, by letter dated 16.05.2009, Respondent No. 1 demanded exorbitant amount towards stamp duty. The Petitioner approached Respondent No. 1-Authority requested for speaking order and thereafter by Orders dated 30.10.2009, Respondent No. 1 has adjudicated the documents as indicated above.

6. The Petitioner challenged the orders passed by Respondent No. 1 by filing Appeal Nos. 1 and 2 of 2010, which are dismissed under the impugned orders.

7. In these circumstances, the Petitioner filed these Petitions, which were admitted on 16.06.2011 and on condition of the Petitioner depositing the amount of differential stamp duty, the impugned orders dated 18.12.2010 were stayed. It was clarified that in case of default the interim protection shall stand vacated.

8. The Collector of Stamps, Borivali has filed affidavits-in-reply dated 10.03.2011 in both petitions and has opposed it.

SUBMISSIONS

9. Learned counsel Mr. Patil, appearing for the Petitioner submitted as under:

                   9.1. That mere inventory share to the extent of 40% in the agreement cannot be treated as conveyance. That the per sq. ft. amount agreed by the Society to be paid to the Petitioner should not be treated as ‘construction cost’ and such interpretation would be narrow reading of the agreement.

                   9.2. That Article 5(g-a) of the said Act, came into force with effect from 07.02.1990 and the agreements in question are dated 20.08.1987 and 27.03.1987 which is prior in point of time, therefore, Article 5(g-a) cannot be applied. He relied on judgment of Prabha Laxman Ghate Vs. Sub-Registrar and Collector of Stamps, Pune and Anr. 2004(2) Mh.L.J. 665, in support of this submission.

                   9.3. That if on termination of the agreement, the Petitioner’s allottees (subsequent third-party purchasers) do not have right against Petitioner’s vendor i.e. the Society, then the Petitioner cannot be said to have received the property under conveyance and therefore the document cannot be interpreted as conveyance for charging stamp duty. He relied on judgment of Vaidehi Akash Housing Private Limited Vs. New D.n. Nagar Co-op. Housing Society Union Limited & Others 2015 (3) ABR 270 in support of this submission. He submitted that if the impugned orders are accepted, then the whole jurisprudence under the Vaidehi Akash (Supra) will be upset.

                   9.4. He also relied upon Suhas Damodar Sathe Vs. The State of Maharashtra and Anr. (WP/8030/2017 Judgment dated 11.03.2025) of this Court in support of his submission that there is no present transfer of title. He submitted that if tests laid down in paragraph No. 28 of said Judgment are applied, especially to Clauses 4, 5 and 7 of the documents, then the Petitioner-Developer is clearly only an agent who is allowed to develop and construct and who has been given authority to sell flats and shops. He submitted that even the purchasers from the Petitioner developer are meant to be proposed incoming members of the Society and therefore there is no absolute transfer of title and the document cannot be treated as conveyance. That since the purchasers are obliged to join the society, the Petitioner developer has no full control even over 40% of the sale inventory.

                   9.5. He further relied upon Chief Controlling Revenue Authority and Another Vs. Reliance Industries Ltd. and Anr. 2016 SCC OnLine Bom 1428 in support of his submission that it is the ‘instrument’ that is chargeable and ‘not the transaction’.

                   9.6. Lastly, he relied on Adityaraj Builders Vs. State of Maharashtra, (Bombay High Court, WP/4575/2022 with other, Judgment dated 17.02.2023) in support of his submissions.

10. On the other hand, learned AGP supported the impugned orders contending inter alia as under.

                   10.1. That though the agreements in question are dated 20.08.1987 and 27.03.1987 its xerox copies along with police complaint of loss of original, was presented for adjudication on 25.09.2008, which is much after Article 5(g-a) came into force (07.02.1990) and therefore, it cannot be argued that Article 5(g-a) will not apply. That therefore the judgment of Prabha Laxman Ghate (Supra), will have no application.

                   10.2. That overall reading of all the clauses in the agreement clearly suggest that 40% of the permitted construction is fully given to the Petitioner-Developer over which he has full control for the purpose of development and sell. Therefore the agreement is conveyance within the meaning of Section 2(g) read with 2(l) of the said Act and Article 25 is rightly applied.

                   10.3. She further submitted that the argument of subsequent purchaser-allottee not having right against the Society is just a hypothetical argument, and in the present case, the agreement in question is not at all terminated. Therefore, Vaidehi Akash (Supra) will have no application.

                   10.4. She submitted that the interpretation of document for the purpose of levy of stamp duty is different than the interpretation of document for the purpose of deciding the rights and liabilities of the parties inter-se. She submitted that according to the settled law, for the purpose of levy of stamp duty, ‘substance has to be seen over form’ and documents have to be considered as a whole.

                   10.5. She finally submitted that no interference is required in the impugned order.

REASONS AND CONCLUSIONS

11. I have considered the rival submissions and perused the record and caselaw.

12. It is seen from the impugned Orders that the Petitioner had argued before the Authority that the document is purely a construction contract and no right, title and interest is received from the Society and it was also argued that Article 5(g-a) will not apply.

13. At the outset, it is pertinent to note that the argument about the non application of Article 5(g-a) of the said Act is apparently accepted by the Respondent No.2-Authority. It is apparent from the impugned order itself. The concerned Authority has clearly stated that Article 5(g-a) has come into effect from 07.02.1990 (being after the date of the document in question) and question of its application does not arise. In that view of the matter, there is no reason to deal with the submission of the Petitioner about non application of Article 5(g-a) or reliance placed on Prabha Laxman Ghate (Supra).

14. Perusal of the impugned order further clearly shows that the documents in question have been considered under Article 5(h) in the category as "in any other case" read with explanation -I of Article 25 of the said Act. The Authority has also referred to the definition of word 'conveyance' under Section 2(g) of the said Act. After considering clause 4 of the documents, the Authority has held that definite rights and interest in the property are agreed in favour of the Petitioner-Developer by the Society and the said documents qualify for grant of specific performance to the extent of 40%. The Authority has considered that explanation-I in Article 25 is inserted in the said Act w.e.f. 10.12.1985 and therefore the documents in question executed in March, 1987 and August, 1987 (in two petitions) are covered by the said explanation. The Authority has further held that though the document is titled as ‘agreement’, it is found to be conveyance as per explanation -I and right is accrued in favour of the Petitioner coupled with the fact that possession was also transferred. Therefore, it is held that this is a fit case to charge the document as per conveyance and it cannot be called as construction contract.

15. Section 2(g) of the said Act provides that conveyance includes ‘every instrument’ and Section 2(l) provides that ‘instrument’ includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded. Section 2(l) provides that instrument does not include a bill of exchange, cheque, promissory note, bill of lading, letter of credit, policy of insurance, transfer of share, debenture, proxy and receipt. Therefore conjoint reading of Section 2(g) and 2(l) of the said Act shows that every instrument in which right or liability is created is conveyance as per the definition.

16. In the present case the document in question is not included in any of the exceptions stated in Section 2(l) of the said Act. Therefore, the learned AGP is justified in contending that the document can be considered as instrument to be included in definition of conveyance.

17. Clause Nos. 4 to 7 of the documents in question show that the Petitioner-Developer is expected to construct building containing flats with maximum area of 9800 sq. ft. (which is 60% available of the built-up area) for the members of the society and in consideration of the same, the developer is permitted to develop, construct tenements/shops consuming FSI worth 6535 sq. ft. approximately on the remaining portion of the land, "with an authority to sell such flats/shops to proposed incoming members on such consideration as the developer deems fit." It is therefore, clear that under the documents, the Petitioner-Developer has received authority not only to develop and construct the tenements but also has authority to sell the same for whatsoever consideration it deems fit. In that view of the matter, the documents clearly have trappings of a conveyance.

18. It is material to note that the Society has agreed to pay to the Petitioner-Developer amount @ Rs.170/- per sq. ft. for construction cost in respect of 9800 sq.ft. area (flats) agreed to be handed-over to the society members. This is an indication that the Developer has been paid construction cost and the land has been made available. Further, in Clause 7, it is seen that for permitting the Petitioner-Developer to construct and sell tenements, in respect of remaining 40% inventory, the Petitioner-Developer has agreed to pay to the society @ Rs. 65/- per sq. ft. This ‘monetary give and take’ clearly indicates that for whatever right the Society holds in the land, apart from constructing and handing over of possession of 60% inventory, the Petitioner-Developer has also agreed to pay additional amount, for letting him use remaining 40% inventory in whatever manner he wants. This clearly indicates full authority and independence of Petitioner-Developer about remaining 40% construction. This is also one more indication that the documents have trappings of being conveyance.

19. In that view of the matter, there is no merit in the submission of the Petitioner that documents are construction contracts. The submission that since Petitioner-Developer is ‘allowed to develop and sell’ 40% tenements is ‘only permissive’ showing ‘agency’ cannot be accepted. Overall reading of the clauses of the document, as discussed above, establishes complete authority to construct and sell 40% of the construction, which cannot be called as mere agency agreement.

20. Turning to the argument advanced by learned counsel for the Petitioner that the document in question must be viewed from the lens of rights created inter-se the parties based on law laid down in Vaidehi Akash (Supra). In Vaidehi Akash (Supra), the developer had entered into a development agreement of which specific performance was sought and the learned Single Judge of this Court was considering the submissions at the time of hearing motion. Bare reading of Paragraph No. 16.6 (relied upon the Petitioner) shows that it is ‘from a contractual standpoint’ between the Society, first developer, second developer and third party purchasers. In the said case, admittedly there was second developer involved and in that context, while evaluating prima facie case, balance of convenience and irreparable loss, the observations are made that third party purchasers have no case against the Society or the second developer. The attempt of the learned counsel for the Petitioner to pull this standpoint to mean that if the third party purchasers have no right against the Society then the Petitioner-Developer cannot be said to have received title or conveyance, can be considered while dealing with dispute of parties inter se. But it is too far fetched to apply that analogy when the Court is evaluating the document for the purpose of levy of stamp duty. In any case, the Court cannot lose sight of the fact that in Vaidehi Akash (Supra) there was an aspect of termination of agreement by the Society and in that context, the Court was examining contractual relationship between the parties. In the present case, as rightly pointed out by learned AGP, there is no termination of the document in question. Therefore, the argument based on Vaidehi Akash (Supra) is only hypothetical and cannot be applied to the facts of the present case.

21. In Suhas Damodar Sathe (Supra), learned Single Judge of this Court has enlisted certain tests for interpreting a document about transfer of title and interest, while considering the exact same question as involved in the present case i.e. stamping of instrument. Applying test in paragraph No.28 of the judgment to the facts of the present case, the Society is found to have lost control over 40% of construction because the Petitioner-Developer has been granted right to alienate or create third party rights, interest. This is a clear pointer towards document being conveyance. Further, in the present case, the Petitioner-Developer obtained right to dispose of 40% of construction in its own capacity and collect consideration thereof and therefore he stands in the shoes of an owner. The document does not indicate that the Petitioner-Developer’s ‘only consideration’ is an opportunity to construct and earn profit from prospective purchasers, because apart from such consideration, the Petitioner-Developer is receiving construction cost for 60% construction from the Society and Petitioner is paying amount at fixed rate to the Society for the remaining 40% construction. In that view of the matter, applying said test also, indicates that the document in question is conveyance.

22. Chief Controlling Revenue Authority Vs. Reliance Industries (Supra) is relied upon only for the purpose of contending that it is the instrument which is chargeable and not the transaction. Perusal of the said judgment shows that in that case, amalgamation scheme between two companies has resulted in two orders, one of this Court and another of Gujrat High Court, effecting the transfer. These two orders were treated as documents attracting stamp duty. Thus one transaction had led to multiple instruments/documents. In such context, Full Bench of this Court has held that duty is attracted on the ‘instrument and not on a transaction’. There is no dispute about the proposition of law laid down in the said judgment. In the present case, however, there are no multiple documents arising out of one transaction. Transactions are reflected through two documents in respect of two pieces of land. Therefore, for gathering intention of the parties, it is necessary to look into the nature of transaction agreed. Therefore, the said judgment will also not advance the case of the Petitioner in principle.

23. Lastly, reliance placed on Adityaraj Builders (Supra) is clearly misplaced, in as much as, in the said judgment, Division Bench of this Court was considering whether stamp duty can be levied on Permanent Alternate Accommodation Agreement ("PAAA") in redevelopment. In the present case, the document in question is the development agreement by the Society in favour of Petitioner-Developer which is the basic instrument on which the whole development has taken place. Therefore, the said judgment is not at all helpful to the Petitioner.

24. One more argument was advanced on behalf of the Petitioner contending that under clause No. 4 of the documents in question, proposed purchasers from the 40% sellable component are agreed to be incoming members of the Society and this indicates that the Petitioner-Developer has no control over the 40% sale component. This can hardly be taken as an indication for the purpose of charging a document with stamp duty. This is obviously due to nature of the documents. Parties have agreed that 60% construction will be flats for society members and 40% will be purchasers from developer, but all are admittedly in the same building / complex, thereby requiring them to be member of the same Society. This clause is more in the nature of a safeguard for the Society, so that the third party purchasers from the developer in respect of 40% construction cannot claim independent rights about society formation etc. This aspect, in my considered opinion, is not at all germane to the issue at hand. Therefore the said argument is rejected.

25. In the aforesaid facts and circumstances and for reasons indicated above, no perversity is found in the impugned orders. The view taken is most probable view based on material available on record. Hence, there is no reason to interfere in writ jurisdiction.

26. Accordingly, writ petitions are dismissed. Rule is discharged. No order as to costs.

27. In view of dismissal of the petitions, Registry is directed to release the amount deposited by the Petitioner in this Court along with accrued interest, in favour of Respondent No.1-District Collector, of Stamps (Borivali Taluka) and such amount shall be adjusted towards the amount recoverable under orders of adjudication. Considering that the Petitioner had deposited the amounts under order of this Court and interim stay was granted, separate interest on the said amounts shall not be charged by the Respondent Authority from the date of the deposit.

28. All concerned to act on duly authenticated or digitally signed copy of this order.