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TMI Blog2023 (5) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... ficial Liquidator was accorded permission by the learned Company Judge to execute the sale deed in favour of the first respondent in the appeals, viz, M/s. Dankuni Steel Ltd. A sale deed came to be executed by the Official Liquidator in favour of the first respondent dated 5th August, 2004. In the sale deed in the preambular portion we may notice the following statements: "D. WHEREAS the Official Liquidator has put the properties of the Company for sale in terms of orders of the Hon'ble High Court and whereas the Hon'ble High Court of Andhra Pradesh, Hyderabad by an order dated 04-02- 2004 made in C.A.No.736/2003 in R.C.C.No. 10/2001 (copy enclosed) was pleased to confirm the sale of the assets pf the Company such as land, building, plant and machinery and other assets in favour of Messrs SMC Marketing Pvt. Ltd., having its office at Room No.617, 6th floor, P 41, Princep Street, Kolkatta - 700 072, represented by its authorized representative Sri Amar Chand. Choudhary for a total sale consideration of Rs.8.35 crores. E. WHEREAS the Hon'ble High Court of Andhra Pradesh, Hyderabad passed by an order dated 15-06-2004 made in C.A. No. 1202/2004 was pleased to direct th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rights, easements, interests etc., the rights which ordinarily pass on through such sale on and over the said land in favour of the Vendee to hold and to enjoy the same as absolute owner." 5. Next, we must notice the schedule of the property which inter alia reads as follows: "All that piece and parcel of the property admeasuring acres of 46.7167 cents situated at Dusi Village, Srikakulam District, within the limits of Sub-Registrar, Amudalavalasa, belonging to M/s. Midwest Iron & Steel Co. Ltd. in the above R.S. Numbers sold by the Vendor to Vendee is bounded by..." The boundaries are hereafter set out. 6. Since the sale deed in favour of the nominee, namely, the first respondent came to be executed pursuant to order of the Company Judge dated 15.06.2004 made in C.A. No.1202 of 2004 as stated in Clause E (supra), we may notice the prayers and relevant part of the order. They read as under: "Application under Section of the Companies Act, 1956 R/W Rule 9 of the Companies (Court) Rule, 1959, praying that this High Court may be pleased to direct the Official Liquidator to execute the sale deed in respect of the land and building and civil works belonging to the company in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value of the property in respect of which a conveyance deed has to be executed is decided by the Registration Authorities. It is needless to observe that at the time of completion of this exercise, Official Liquidator will hand over all the original documents in respect of the property. The application is, accordingly, ordered." (emphasis supplied) 7. It is thereafter that as already noticed that the sale deed came to be executed on 05.08.2004. Respondents 1 and 2, it would appear claimed benefit of GOMS No.103 dated 07.02.2001. The said GOMS read as under inter alia: "GOVERNMENT OF ANDHRA PRADESH ABSTRACT Indian Stamp Act, 1899 - 50°/o Exemption from payment of Stamp Duty and Registration Fee on the instruments of leases, lease-cum-sales and sales executed in favour of Industrial Units in the State for the purposes of selling up or expansion or development of Industries - Orders - Issued. REVENUE (REGISTRATION. II) DEPARTMENT G.0.Ms.No.103 Dated :07 .02.2001 Read the following:- 1. Letter from the Chairman and Managing Director, A.P.I.I.C. No.SIPC/APIIC/M(Pig)/97, dt.11.5.2000. 2. From the Commissioner and Inspector General of Registration and Stamps ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistration fee shall be leviable on loan agreements, credit deeds, mortgages and hypothecation deeds executed by such industrial units in favour of banks or financial institutions for the purposes of setting up or expansion or development of industries". (BY ORDER AND IN THE NAME OF THE GOVERNOR OF ANDHRA PRADESH) K.C.MISRA PRINCIPAL SECRETARY TO GOVERNMENT" 8. It would appear that the respondents 1 and 2 applied for registration of the sale deed according to the appellants on the basis that the land and building had to be registered with the value thereof being shown as Rs.1,01,05,000/-. The Sub-Registrar, namely, the first appellant by communication dated 12.08.2004 informed the first respondent that the registration was kept pending for the following reasons: (1) The chargeable value as per the contents of the documents was assessed to be Rs.8.35 crores whereas respondents 1 and 2 had stated that only the land and buildings were being transferred for Rs.1,01,05,000/-. (2) Since 50% exemption was being claimed, the G.O. had to be verified thoroughly. (3) The land in some of the Survey Nos. were found to be Government land. 9. The respondents 1 and 2 feeling aggrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the sale deed in question, and seems to have made an attempt to favour the petitioners by suppressing certain fact: and incorporating the undermentioned highlighted portion in page 3 of the sale deed in question reading - "AND WHEREAS the total sale consideration is Rs.8.35 crores for the entire assets of the company comprising of land, building, Civil works, plant & machinery and current assets, etc., An amount of Rs.1,01,05,000/- is taken as the value of the land, building and civil works basing on the offer received by the official liquidator when the assets were put for sale individually and the purchaser has agreed to pay the stamp duty/registration fees/transfer fees as per the value derived by the sub registrar." obviously that statement, mentioning the value of the building etc. as Rs.1,01,05,000/- is made on the basis of the offers received by him (official liquidator) on 04-12-2003 whereat M/s.Bhagya Nagar Metals Ltd., offered Rs"101.05 lakhs for Lot No.1 and Rs.301.00 lakhs for Lot No.2, and M/s.Mahavir Ghantakaram Enterprises offered Rs.29.50 lakhs for Lot No.3. So, it is clear that the total value of the offers for the three lot received by the official liquida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08-2004, in favour of M/s.Dankuni Steels Limited, Kolkatta transferring the assets of the company M/s.Midwest Iron and Steel Limited, Dusi Village, Srikakulam District which is in liquidation for Rs.1,01,05,000/- and signed all the connected statements of the said document. 11. The learned single Judge thereafter referred to order passed in C.A. No.1202 of 2004. Thereafter, the single Judge found that there would be no doubt that respondents 1 and 2 M/s. Concast Ispat Limited were group companies. Another aspect noted by the learned Single Judge was the conduct of the second respondent filing Civil Appeal No. 823 of 2004 seeking permission of the Court to get the plant and machinery repaired and overhauled on the basis that it intended to revive the unit and run it. An Order, it was noted, was passed thereon on 06.04.2004 allowing the second respondent to carry out repair and overhaul operations inter alia subject to certain conditions. Next, the learned Single Judge noted the letter dated 13.08.2004 by the General Manager of the District Industries Centre to the second appellant. It reads: "the Commissioner of Industries, Andhra Pradesh, Hyderabad informed that M/s. Concast F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of an 'industrial unit' purchasing vacant land, claiming benefit of the G.O., just to sell it away as plots and make money. The intention of the government obviously is that 'industrial unit' should be established in the land and that the land should itself be used, for running an 'industrial unit' by the purchaser. So, it is clear that the above extracted G.O. is meant to encourage establishment and running of industrial units only. Since petitioners are claiming benefit of the above extracted G.O. and since they also obtained permission from the Court to clean and over haul the machinery, it is clear that the sale deed in question covers not only Land, Buildings and Civil works but plant and machinery also." 13. The Court relied on Duncans Industries Limited v. State of Uttar Pradesh and others (2000) 1 SCC 633 and found that since the property covered by the sale deed covered not only the land, buildings and civil works, but plant and machinery also, the value of the plant and machinery also had to be considered for payment of stamp duty. The learned Single Judge found that the value of the current assets had to be reduced. Still further he found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be registered is found to be Government land it. may be excluded from registration subject to the petitioner's right to avail their legal remedies, against any such action, being left open, we consider it appropriate to dispose of both the Writ Appeals directing the Sub-Registrar to consider the petitioner's request for registration of the lands and buildings of the company under liquidation, purchased by them in the auction conducted by the Official Liquidator; determine its value on the date of presentation of the document for registration; collect the stamp duty and registration fees thereupon; and, thereafter, consider registration of the sale deed effecting transfer of the lands and buildings, of the company under liquidation, to the petitioner herein, in accordance with law. The entire exercise shall be completed at the earliest preferably within three 1 months from the date of receipt of a copy of this order. Both the appeals are disposed of accordingly. There shall be no order as to costs. Miscellaneous petitions, if any, pending shall stand closed. SD/- K.GANGADHAR RAO DEPUTY REGISTRAR //TRUE COPY// SECTION OFFICER" 15. Notice was served on respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f such transaction for seeking registration? b. Second issue, according to him, is whether the Registration Authorities are empowered to go behind an ostensible instrument and ascertain the stamp duty payable on the actual transaction? 19. He took us to the definition of the word 'instrument' in the Stamp Act, 1899 (hereinafter referred to as, "the Act"). He further drew our attention to Section 47A introduced by the Andhra Pradesh (Amendment) Act of 1971. That apart, he also pointed out that by Andhra Pradesh Act (8 of 1988), a proviso has been inserted in Section 27 of the Act, which we shall advert to. He further pointed out that the triumvirate of Sections 4, 5, and 6 of the Act, has been succinctly explained by this Court in the decision reported in Member, Board of Revenue v. Arthur Paul Benthall AIR 1956 SC 35. He would, on the strength of the law laid down therein contend that the destiny of this case would be governed by Section 5 of the Act. He would contend that there is only one instrument in this case, i.e., the deed of conveyance, and since more than one matter, as expounded by this Court, exists in substance, there would be justification for the Authorities having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g authority is entitled to verify statements in D, F and H in conjunction with entire recitals to ascertain, if the instrument purported to provide for a larger transaction than seen projected in the schedule. Further, the appellant could ascertain by any measures indicated in Section 27 read with Section 47A as to whether the immovable property is wholly and properly described. This may include an exercise of verifying whether there is any embedded plant and machinery that ought to have been shown as immovable property and was wrongly excluded. He pointed out that the original transaction comprised the sale of all the following categories of assets of the company in liquidation. They are as follows: A.Land and Building - which is immovable property. B.Plant and Machinery that may be permanently embedded to the earth and answering the description of immovable property as defined. C.Plant and Machinery and other effects which may not come under the description of immovable property and hence constitute movable property. D.Current Assets and Motor Vehicle which are movable property. 21. He would point out that there were four distinct matters which were comprised in the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent mentioned in that Schedule which, not having been previously executed by any person, is executed in India on or after the first day of July, 1899; (b) every bill of exchange payable otherwise than on demand] or promissory note drawn or made out of India on or after that day and accepted or paid, or presented for acceptance or payment, or endorsed, transferred or otherwise negotiated, in India; and c) every instrument (other than a bill of exchange, or promissory note) mentioned in that Schedule, which, not having been previously executed by any person, is executed out of India on or after that day, relates to any property situate, or to any matter or thing done or to be done, in India and is received in India: Provided that no duty shall be chargeable in respect of- (1) any instrument executed by, or on behalf of, or in favour of, the Government in cases where, but for this exemption, the Government would be liable to pay the duty chargeable in respect of such instrument; (2) any instrument for the sale, transfer or other disposition, either absolutely or by way of mortgage or otherwise, of any ship or vessel, or any part, interest, share or property of or in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Registration Act, 1908, (Central Act 16 of 1908), while registering any instrument of conveyance, exchange, gift partition, settlement, release , agreement relating to construction, development or sale of any immovable property or power of attorney given for sale, development of immovable property, has reason to believe that the market value of the property which is the subject matter or such instrument has not been truly setforth in the instrument, or that the value arrived at by him as per the guidelines prepared adopted by the parties, he may keep pending such instrument, and refer the matter to the Collector for determination of the market value of the property and the proper duty payable thereon: Provided that no reference shall be made by the registering officer unless an amount equal to fifty percent of the deficit duty arrived at by him is deposited by the party concerned. (2) On receipt of a reference under sub section (1), the Collector shall after giving the parties an opportunity of making their representation and after holding an enquiry in such manner as may be prescribed by rules made under this Act, determine the market value of the property which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be exercised by the authority specified therein in respect of any issue or question which is the subject matter of an appeal before, or which was decided on appeal by the appellate authority under sub-section (5); (iii) no order shall be passed under Clause (I) enhancing any duty unless an opportunity has been given to the party to show cause against the proposed revision of market value and deficit stamp duty; (iv) where any action under this sub-section has been deferred on account of any stay order granted by the Court in any case, or by reason of the fact that another proceeding is pending before the Court involving a question of law having a direct bearing on the order or proceeding in question, the period during which the stay order was in force or each proceeding was pending shall be excluded in computing the period of six months specified in the proviso to clause (I) of this section for the purposes of exercising the power under this sub-section. (4) Any person aggrieved by an order of the Collector under sub-section (2) or subsection (3) may appeal to the appellate authority specified in sub-section (5). All such appeals shall be preferred within such time and sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty Act, 1882 "8. Operation of transfer.-Unless a different intention is expressed or necessarily implied, a transfer of property passes forthwith to the transferee all the interest which the transferor is then capable of passing in the property, and in the legal incidents thereof. Such incidents include, where the property is land, the easements annexed thereto, the rents and profits thereof accruing after the transfer, and all things attached to the earth; and, where the property is machinery attached to the earth, the moveable parts thereof; and, where the property is a house, the easements annexed thereto, the rent thereof accruing after the transfer, and the locks, keys, bars, doors, windows and all other things provided for permanent use therewith; and, where the property is a debt or other actionable claim, the securities therefor (except where they are also for other debts or claims not transferred to the transferee), but not arrears of interest accured before the transfer; and, where the property is money or other property yielding income, the interest or income thereof accruing after the transfer takes effect." 29. In Member, Board of Revenue (supra), this Court h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erring to Section 4 or Section 6 for determining the scope of Section 5 or for construing its terms. It is not without significance that the legislature has used three different words in relation to the three sections, "transaction" in Section 4, "matter" in Section 5, and "description" in Section 6." 30. In the Judgment of this Court in Himalaya Space House Company Limited (supra), this Court was dealing with the case under the Act containing Section 27 sans the proviso added by the Andhra Pradesh Act. Paragraph 11 of the judgment reads as under: "11. It was urged that in view of Section 27 of the Stamp Act, it was permissible for the Revenue to look into the terms and conditions of the agreements entered into by Uttamchand with the various persons to whom he had assigned flats, offices and shops, particularly in view of the fact that the impounded document makes reference to those agreement. We are not able to accept that contention. Section 27 prescribes that "The consideration (if any) and all other facts and circumstances affecting the chargeability of any instrument with duty, or the amount of the duty with which it is chargeable shall be fully and truly set forth therein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in 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 fertilizer at various stages of its production......... "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 dated 9-6-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t amount to incorporation of the terms and conditions of an earlier transaction or the intention of the parties. We have 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.... 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 on "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 the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n fees/transfer fees as per the value derived by the Sub-Registrar. This last statement is traceable to order dated 15.06.2004 passed in civil Appeal 1202 of 2004 which we have referred to in paragraph 6. A copy of the said order is enclosed with the sale deed. It is further stated that the 46 acres and a few cents was 'now' registered in favour of the vendee. In the Recital Clause, thereafter, what has been purported to be done is that it is shown that the vendors have sold, transferred, conveyed, alienated, assigned to the vendee all the scheduled property. The matter does not end there. The aforesaid recital is followed up with the words 'along with all the rights, easements, interests, etc., the rights which ordinarily passed on through such sale on and over the said land in favour of the vendee and to hold and enjoy the same as absolute owner. In the Schedule, no doubt, what is mentioned is 46 acres and a little over 71 cents. We have already referred to the conduct of the first and second respondents, which commended itself to the learned Single Judge as conveying the impression that they wanted to repair and maintain the plant and machinery. Furthermore, they have also sough ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss or implied indication, a transfer of property passes to the transferee all the interests, which the transferor was capable of passing in the property and in the legal incidents thereof. Such incidents includes, inter alia, where the property is land, all things attached to the earth. When the property is machinery attached to the earth, the movable parts thereof also are comprehended in the transfer. 37. In the Recital Clause, a proper reading of the same would tend to indicate that what is conveyed is rights over the scheduled property, which, no doubt, is the land, as described in the Schedule but it includes all the rights, easements, interests, etc., i.e., the rights which ordinarily passed on such sale over the land. It is from a reading the said recital in conjunction with Section 8 of the Transfer of Property Act that the intention of the parties become self-evident that the vendor intended to convey, all things, which inter alia stood attached to the earth. The mere fact that there is no express reference to plant and machinery in the Recital Clause cannot mean that the interest in the plant and machinery which stood attached to the land, which was scheduled, was not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done to ascertain the same by the appellants. 39. The proviso to Section 27 of the Act, added by the Andhra Pradesh Amending Act (8 of 1988), does empower the Officer to inspect the property, make local inquiries in the facts, call for connected records, examine them and satisfy that the provisions of Section 27 are complied with. Section 27, undoubtedly, provides that the consideration, if any, and the other facts and circumstances, affecting the chargeability of any instrument or the amount of duty, must be fully and correctly set forth. Equally, Section 47A of the Andhra Pradesh Amending Act (8 of 1988), empowers the Registering Officer to deal with undervalued instruments. We have adverted to the provision and it provides for an elaborate procedure to deal with the problem of undervaluation. It may be true that Section 27 of the Act read with Section 64, as interpreted in Himalaya Space House Company Limited (supra), was understood as meaning only that failure to comply with Section 27, was punishable under Section 64. The Court, in the said case, in fact, noted the absence of any provision, empowering the Revenue to make an independent inquiry for determining the value of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted as ineligible under GoMS 9 dated 05.01.2001. It appears to be their case that the subject industry is a mini steel industry and mini steel industry plants were not eligible and the item appears as Item 56 in Annexure 1 to GoMS 9 dated 05.01.2001. Since, the respondents gave up their claim for exemption, the case of the appellants was not gone into by the Division Bench. We are of the view that the second appellant can look into this aspect as well. 43. The upshot of the above discussion is that the Appeal filed against Writ Appeal No. 1873 of 2005 is allowed. The Appeal filed against the Judgment in Writ Appeal No. 2457 of 2005 is partly allowed. The impugned Judgment is set aside and we restore the Judgment of the learned Single Judge subject to the modification that we set aside the direction to the second appellant to give the benefit of GoMS 103 dated 07.02.2001. The second appellant will ascertain the value of plant and machinery on the basis of it answering the description of the immovable property as understood in law. The second appellant will also go into the question, whether the first respondent would be entitled to the benefit of the exemption of stamp duty, etc., ..... X X X X Extracts X X X X X X X X Extracts X X X X
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