TMI Blog2023 (5) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... used in a statute in two consecutive provisions, it would be difficult to maintain that they are used in the same sense, and the conclusion must follow that the expression distinct matters in Section 5 and descriptions in Section 6 have different connotations - In other words, the Court apparently approved of the view taken that the Court should look at the instrument as it stood. When it comes to the definition of immovable property in the Transfer of Property Act, it has been defined as not including standing timber, growing crops or grass . In the Registration Act, 1908, immovable property includes, apart from land and buildings, things attached to the earth or permanently fastened to anything which is attached to the earth but not including standing timber, growing crops or grass. Most importantly, we cannot also be oblivious that Section 8 of the Transfer of Property Act declares that in the absence of an express 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Private Ltd. who figured as the highest bidder, became the successful auction purchaser. It bid for the property which consisted of land, building, civil works, plant machinery and current assets, etc. The amount for which the second respondent was declared the highest bidder was Rs.8.35 crores. On the basis of a direction given in C.A. No. 1203 of 2004 at the instance of the second respondent, the Official 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule of property and clearly delineated in red colour in the plan annexed hereto. 4. Next, the recital clause (1) reads as follows: NOW THE VENDOR HEREBY ASSURES AND COVENANTS THE VENDEE AS UNDER: In consideration of the said amount paid by the Vendee, the Vendors here by sell, transfer, convey, alienate, assign unto and to the use of the Vendee absolutely and forever all that the scheduled property along with all the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direct the Official Liquidator to execute the sale deed in favour of M/s Dunkuni Steels Limited for a consideration of Rs.40, 13,000/- (Rupees forty lakh and thirteen thousand only) is confirmed in the auction conducted by this Court, as the land, building and machinery of the company in liquidation was sold to the applicant company at a price of Rs.8,35,00,000/- (Rupees eight crore thirty five lakh only), it would be better if the issue as to 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 instrument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptember, 1958 and published at pages 2250 to 2253 of Part I of the Andhra Pradesh Gazette, Dated : 11.09.1993 is subsequently amended from time to time. AMENDMENT In the said Table of Fees in article l(a), after clause K (XCXXIV) , the following clause shall be added, namely :- K (XCXXV): The Registration Fee leviable under this Article on the instructions of leases, lease cum sales and sales executed in favour of industrial units shall be reduced by 50 percent and no registration 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased by the second petitioner only as one lot, but not in three different lots, and since there is nothing in the sale deed in question to show the exact value of the Land, Building and Civil works. The file produced by the official liquidator shows that there was correspondence between him and the petitioners with regard to the contents etc. of the sale deed to be executed by him i.e. official liquidator. Here, I am constrained to observe that the official liquidator does not seem to have acted fairly while executing 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/tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im only, mentioned the non-existing 'offer value' of Rs.101.05 lakhs as the value of the Land, Buildings and Civil works, in the sale deed. 10. The Court further notes as follows: 8. In R.C.C.No.10/2001/ AR/2004 dated 05-8- 2004 sent by him, in reply to the memo impugned in W.P.No.16104 of 2004 issued by the third respondent, official liquidator stated as follows. In pursuance of the orders of the Hon'ble High Court of Andhra Pradesh, Hyderabad in the reference cited, I have executed a sale deed dated 05-08-2004, 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, purchased by second petitioner in court auction, also are immovable properties forming part of the land and buildings in or on which they are located. In my considered opinion, petitioners claiming benefit under G.O.Ms.No.103 dated 07.02.2001, while contending that the sale deed in question is for Land, Buildings and Civil works only, but not plant and machinery, would be incongruous, because the intention of the Government in passing the above G.O., obviously, is to give benefit to 'industrial units'. It does not enable an owner 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entation of the document, was Rs.1,01,05,000/- or not is a matter which the Sub-Registrar is required to consider; and it is on the value of the land and buildings, as determined by. him, that stamp duty and registration charges would be required to be paid subject, of course, to the petitioner's right to question the order of the Sub- Registrar before the appellant authority under the Act. As the petitioner has given up their claim for 50% exemption and Sri S. Ravi, learned Senior Counsel, would fairly state that, if a part of the land sought 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 regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto error in adopting the reasoning that if the Respondents 1 and 2 did not want the registration of the plant and machinery, they cannot be compelled to do so. He would further point out that adequate opportunity was afforded to the respondents by the District Registrar but they chose not to avail the opportunity. 18. The learned Amicus would, after referring to the facts, project two issues as arising for consideration: a. Whether there is a comprehensive sale of all the assets and, in a single transaction, is it permissible to draw up a conveyance for only a part of 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. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. He would draw our attention to the definition of the word immovable property in the Registration Act, 1908, the General Clauses Act, 1897 and the Transfer of Property Act, 1882. He would also point to Section 8 of the Transfer of Property Act, 1882, as a relevant provision, which sheds light and which should guide the Officer. The Authorities can and must break down the transaction or the instrument and demarcate the distinct matters and assess the matters separately and charge the aggregate of the stamp duty under Section 5 of the Act. He would submit that the registering 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred, limited, extended, extinguished or recorded; and (c) any other document mentioned in Schedule I, but does not include such instruments as may be specified by the Government, by notification in the Official Gazette. 24. Sections 3, 4 and 5 of the Act must be noticed and they read as follows: 3. Instruments chargeable with duty. Subject to the provisions of this Act and the exemptions contained in Schedule I, the following instruments shall be chargeable with duty of the amount indicated in that Schedule as the proper duty therefore respectively, that is to say (a) every instrument 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act 8 of 1988, the following proviso was added to Section 27: Provided that a registering officer appointed under the Registration Act, 1908 or any other officer authorised in this behalf, may inspect the property, which is the subject matter of such instrument, make necessary local enquiries, call for and examine all the connected records and satisfy that the provisions of this section are complied with. 27. The next relevant provision is Section 47A inserted by Andhra Pradesh (Amendment) Act, which reads as follows: 47-A. Instruments of conveyance, etc., under-vaulted how to the dealt with: - (1) where the registering officer appointed 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 adopte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on mistake, omission, or failure to take any factual evidence effecting the market value of the property, may make such enquiry or cause such enquiry and inspection of the property to be made and subject to the provisions of this Act, may initiate proceedings to revise, modify or set aside such order or proceeding and may pass such order in reference thereto as he thinks fit determining the market value and corresponding deficit stamp duty: Provided that the powers conferred under this clause shall be invoked within a period of six months from the date of the order or proceeding issued by the Collector under subsection (3); (ii) The power under clause (I) shall not 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty includes land, buildings, hereditary allowances, rights to ways, lights, ferries, fisheries or any other benefit to arise out of land, and things attached to the earth, or permanently fastened to anything which is attached to the earth, but not standing timber, growing crops nor grass; In the General Clauses Act, 1897 it reads: 3(26) immovable property shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth; Transfer of Property Act, 1882 3. immoveable property does not include standing timber, growing crops or grass; instrument , means a non-testamentary instrument; Section 8 of Transfer of Property 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpression distinct matters in Section 5 and descriptions in Section 6 have different connotations. xxx xxx xxx 7. The error in this argument lies in thinking that the object and scope of Sections 4 to 6 are the same, which in fact they are not. Section 4 deals with a single transaction completed in several instruments, and Section 6 with a single transaction which might be viewed as falling under more than one category, whereas Section 5 applies only when the instrument comprises more than one transaction, and it is immaterial for this purpose whether those transactions are of the same category or of different categories. The topics dealt with in the three sections being thus different, no useful purpose will be served by referring 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 contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the transfer contemplated the sale of the unit as a going concern, the intention of the Vendor was to transfer all properties in the fertilizer business in question. The High court had held that the machineries which formed fertilizer plant was permanently embedded in the earth with an intention of running the factory. It was found that the machineries were immovable property which were permanently attached to the earth. Para 8 of the said judgment reads as under: 8. The question whether a machinery which is embedded in the earth is moveable property or an immovable property, depends upon the facts and circumstances of each case. Primarily, the court will have to take into consideration the intention of the parties (sic party) when it decided 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 vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat is conveyed under the deed dated 9-6- 1994 is not only the land but the entire fertilizer business including plant and machinery. A perusal of clauses 10, 11 and 13 of the said deed shows that it is the fertilizer factory which the vendor had agreed to transfer along with its business as a going concern and to complete the same the conveyance deed in question was being executed. There is implicit reference to the sale of fertilizer factory as a going concern in the conveyance deed itself . 11. Learned counsel for the appellant has placed for our consideration a judgment of this Court in the case of Himalaya House Co. Ltd. v. Chief Controlling Revenue Authority [(1972) 1 SCC 726] to contend that a mere reference to an earlier agreement does not 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 consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the second respondent. It has been recited in Clause (H) that the vendee has paid the full consideration. More significantly, it is stated therein also that as per the terms of the sale properties have been sold by the vendor to the vendee on as is where is whatever there is basis . The total sale consideration, it is clear again from the sale deed itself, is Rs.8.35 crores, for the land, building, civil works, plant and machinery and current assets, etc. However, what had been done is an amount of Rs.10105000/- has been taken as the value of the land, building and civil works based on the offer received by the Liquidator, when the assets were put up for sale individually. It is further stated that the purchaser has agreed to pay the stamp duty/registration 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able property. Immovable property has been defined in the General Clauses Act, 1897 as including land, benefits to arrive out of land and things attached to the earth or permanently fastened to anything attached to the earth . When it comes to the definition of immovable property in the Transfer of Property Act, it has been defined as not including standing timber, growing crops or grass . In the Registration Act, 1908, immovable property includes, apart from land and buildings, things attached to the earth or permanently fastened to anything which is attached to the earth but not including standing timber, growing crops or grass. Most importantly, we cannot also be oblivious that Section 8 of the Transfer of Property Act declares that in the absence of an express 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 Rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Section 8 of the Transfer of Property Act and the definition of the word immovable property , which we have adverted to. Viewed in the context of Duncans Industries Limited (supra) and Member, Board of Revenue (supra), as also the other attendant facts, including the contents of the Preambular portion, as also the conduct of the Respondents 1 and 2, it would be clear that the sale deed operated to convey the rights over the plant and machinery as well, which was comprised in the land scheduled in the sale deed. As far as the plant and machinery is concerned, it must, however, be only such plant and machinery, which was permanently embedded to the earth and answering the description of the immovable property as defined. It would appear that such an inquiry was not 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 fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve to be carried out. 42. As noticed by us, the appellants had also appealed against the Judgment of the learned Single Judge. The Single Judge, it must be remembered, while upholding the Order of the second appellant (District Registrar) in regard to the value of the plant and machinery, had directed deducting the value of the current assets and also directed making available benefits of GoMS 103 dated 07.02.2001. Apparently, Respondents 1 and 2 in the Appeal gave up their claim to the exemption on the basis that they succeeded in having the sale deed registered without having to include the value of plant and machinery before the Division Bench. The stand of the appellants would appear to be that GoMS 103 dated 07.02.2001 applied to new industrial units other than those listed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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