TMI Blog1976 (3) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... the Stamp Act. - C.A. Nos. 67, To 122, & 238 of 1969, W.P. No. 489, 491, 537, 538, 539, 540, 541, 561, 635, 636, 638, 639, 677, 684, 685, 688, 695, 710, To 719, 811, To 813, 830, To 832, 863, 854, 855, 867, 870, 1146, 1216, 1219, 1260, 1261, 1265, 1284, of 1967 - - - Dated:- 17-3-1976 - RAY G.A., BEG M.H. AND JASWANT SINGH JJ. C.A. Nos. 67, To 122, 238 of 1969, W.P. No. 489, 491, 537, 538, 539, 540, 541, 561, 635, 636, 638, 639, 677, 684, 685, 688, 695, 710, To 719, 811, To 813, 830, To 832, 863, 854, 855, 867, 870, 1146, 1216, 1219, 1260, 1261, 1265, 1284, 1285, 1292, 1293, 1294, 1309, 1310, 1340, 1446, 1447, 1697, 687 of 1967 K.J. John, Advocate, for M/s. J.B. Dadachanji Co., for the respondents in C.A. Nos. 67, 78, 79, 100, 101 and 103 of 1969. P. Ram Reddy, Senior Advocate (B. Parthasarathi, Advocate, with him), for the appellants. H.K. Puri, Advocate, for R.V. Pillai, Advocate, for the respondents in C.A. Nos. 77, 83, 89, 90, 93, 95, 96, 102 and 120 of 1969. G. Narayana Rao, Advocate, for the respondents in C.A. Nos. 69-73 of 1969. -------------------------------------------------- The judgment of the Court was delivered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... falling within article 35(c) of the Stamp Act. Aggrieved by the said notices, the respondents filed the aforesaid petitions under article 226 of the Constitution for issue of appropriate writs, etc., declaring the aforesaid demand notices as illegal and void and restraining the appellants from enforcing or taking any proceeding for the levy and recovery of the amounts mentioned therein. The respondents contended before the High Court that as the right to pluck, collect and take away beedi leaves and to cut and carry away bamboos, standing timber, etc., was not a right or interest in immovable property so as to attract article 31(c) of the Stamp Act, there could be no question of payment by them of the stamp duty. The respondents also challenged the demand made from them for payment of sales tax on the bid amount, on the ground that as the Government did not carry on any business of sale, the demand was illegal. They further challenged the demand of stamp duty under article 35(c) of the Stamp Act pleading that the security deposits were not mortgages so as to attract the provisions of the said article of the Stamp Act. The petitions were contested by the appellants herein who co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money." "Licence" is defined in section 52 of the Easements Act, 1882, as under "Where one person grants to another, or to a definite number of other persons, a right to do or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful and such right does not amount to an easement, or an interest in the property, the right is called a licence." The expression "immovable property" is not defined in the Stamp Act but is defined in section 3 of the Transfer of Property Act, section 2(6) of the Registration Act and section 3(26) of the General Clauses Act. An idea as to the meaning of the expression can also be gleaned from section 2(7) of the Sale of Goods Act. According to the learned counsel for the appellants, it is the definition of "immovable property" as given in section 3(26) of the General Clauses Act that has to be applied in determining whether the agreements in question fall within the definition of "lease" or not. It would be useful at this stage to set out in juxtaposition th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er thereof, it will be a licence. The legal possession, therefore, continues to be with the owner of the property, but the licensee is permitted to make use of the premises for a particular purpose. But for the permission, his occupation would be unlawful. It does not create in his favour any estate or interest in the property. There is, therefore, clear distinction between the two concepts. The dividing line is clear though sometimes it becomes very thin or even blurred. At one time it was thought that the test of exclusive possession was infallible and if a person was given exclusive possession of a premises, it would conclusively establish that he was a lessee. But there was a change and the recent trend of judicial opinion is reflected in Errington v. Errington [1952] 1 All E.R. 149., wherein Lord Denning, reviewing the case law on the subject, summarizes the result of his discussion thus at 'The result of all these cases is that, although a person who is let into exclusive possession is, prima facie, to be considered to be tenant, nevertheless he will not be held to be so if the circumstances negative any intention to create a tenancy.' The Court of Appeal again in Cobb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portant feature of the agreements is that they did not create any estate or interest in land. The third salient feature of the agreements is that the respondents were not granted exclusive possession and control of the land but were merely granted the right to pluck, cut, carry away and appropriate the forest produce that might have been existing at the time of the contract or which might have come into existence during the short period of the currency of the agreements. The right to go on the land was only ancillary to the real purpose of the contract. Thus the acquisition by the respondents not being an interest in the soil but merely a right to cut the fructus naturales, we were clearly of the view that the agreements in question possessed the characteristics of licences and did not amount to leases so as to attract the applicability of article 31(c) of the Stamp Act. The conclusion arrived at by us gains strength from the judgment of this court in Firm Chhotabhai Jethabai Patel and Co. v. State of Madhya Pradesh [1953] S.C.R. 476., where contracts and agreements entered into by persons with the previous proprietors of certain estates and mahals in the State under which they a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d family or any society (including a co-operative society), club, firm or association which carries on such business..." The term "business" has been defined in section 2(1)(bbb) of the Act as follows: "'business' includes- (i) any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture whether or not such trade, commerce, manufacture, adventure or concern is carried on or undertaken with a motive to make gain or profit and whether or not any gain or profit accrues therefrom; and (ii) any transaction in connection with, or incidental or ancillary to, such trade, commerce, manufacture, adventure or concern." "Sale" is defined in section 2(1)(n) thus: " 'sale' with all its grammatical variations and cognate expressions means every transfer of the property in goods by one person to another in the course of trade or business, for cash, or for deferred payment, or for any other valuable consideration, and includes any transfer of materials for money consideration in the execution of a works contract, provided that the contract for the transfer of such materials can be separated from the contract for the services and the work don ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sal trees grown spontaneously in his zamindari were sold by the zamindar by auction and the purchasers were permitted to fell the trees and sell them after sawing and other processes. In Orient Paper Mills Ltd. v. State of Madhya Pradesh [1971] 28 S.T.C. 532., it was held that the State Government or the forest department could not, merely by selling the forest produce grown on their land, be regarded as carrying on any business of buying, selling, supplying or distributing goods and, therefore, in respect of mere sales of forest produce, neither the State Government nor the forest department was a dealer within the meaning of the definition in section 2(d) of the M.P. General Sales Tax Act, 1958. In Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Travancore Rubber and Tea Co.[1967] 20 S.T.C. 520 (S.C.).and Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Midland Rubber and Produce Co. Ltd. [1970] 25 S.T.C. 57 (S.C.)., where the only facts established were that the assessee converted the latex tapped from its rubber trees into sheets and effected a sale of those sheets to its customers and the conversion of latex into sheets was a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 5 above, will be returned to the depositors, on the conclusion of the sales provided that the officer conducting the sale, may, if he considers it advisable, retain the deposits of any bidders." There is nothing in the above clause to indicate that any right over or in the security deposits was created in favour of the State Government. In Reference under Stamp Act, section 46(1), where a licence issued to an arrack renter expressly required as one of its conditions that the licensee should deposit a sum equal to three months' rental as a security for the due performance of the contract and the licensee executed a muchalka stating that he agreed to all the terms and conditions mentioned in the licence, it was held that neither the licence nor the muchalka taken separately or together fulfilled the conditions of a mortgage as defined in the Stamp Act, i.e., neither thereby actually created an interest in the deposit in favour of the Government. In Rishidev Sondhi v. Dhampur Sugar MillsA.I.R. 1947 All. 190 (F.B.)., it was held that an instrument in which specific sums have been offered as security is not a mortgage deed within the meaning of section 2(17) as money is not "sp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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