VEENA HASMUKH JAIN Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) The question raised for consideration in these appeals is identical as to the duty payable under the Bombay Stamp Act, 1958 on an agreement for sale of flats covered by the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (hereinafter referred to as 'the MOF Act') and the Maharashtra Apartment Ownership Act, 1970.

(2.) A writ petition before the High Court of Bombay was filed by the appellants on the allegation that on October 8, 1987 they entered into an agreement for purchase of a flat with one M/s. Century Enterprises. The agreement for sale was executed in terms of Section 4 of the MOF Act. It was lodged for registration on November 3, 1987 as required under Section 4 of the MOF Act read with Section 17 (1) of the Indian Registration Act, 1908. The consideration disclosed in the agreement was shown at Rs. 3,75,000/- for the purpose of purchase of the flat and a registration fee of Rs. 3,750/- was paid in addition to copying fee and postal charges. The Sub-Registrar of Bombay, by a letter sent to the appellants in February 1988, informed them that the agreement had been impounded and being sent to the Superintendent of Stamps, Bombay. There was also a communication sent by the Assistant Director of Town Planning, Stamp and Valuation dated March 9, 1990 in terms of Rule 3(1) of the Bombay Stamp (Determination of True Market Value of Property) Rules, 1981 to the appellants informing them that he had received a reference from the Collector under Section 32-A of the Bombay Stamp Act for determination of true market value of the property and he had reason to believe that the market value of the property had not been truly and fully set out. The first appellant by a reply sent on October 26, 1990 stated inter alia various contentions that the document in question is only an agreement for sale and no right, title or interest passed on to the appellants so as to attract duty as a conveyance and/or instrument; that Section 32-A of the Bombay Stamp Act had no application; that the appellant was not liable for duty under Entry 25 of Schedule I of the Bombay Stamp Act; that the agreement for sale had been executed under Section 4 of the MOF Act and in terms of the said provision it was mandatory to register the same under Section 17(1) of the Indian Registration Act; that the provisions of the Bombay Stamp Act were not applicable and consequently proceedings under Section 32-A of the Bombay Stamp Act could not have been initiated; and that, therefore, action of impounding the document was illegal. Even before the disposal of those objections, the appellants filed a writ petition challenging the legality and correctness of the notice and also sought for striking down the provisions of the Bombay Stamp Act relating to determination of market value. The matter was placed before the Division Bench which disposed of the said matter.

(3.) The principal question advanced before us as was done before the High Court is whether the document in question, that is, an agreement to sell, is a document conveying right, title and interest of the flat in favour of the appellants. Section 4 of the MOF Act requires an agreement to be drawn in respect of sale with each of the persons who have taken a flat or flats on ownership basis before accepting any money as advance or deposit and such advance payment of money or deposit cannot exceed 20% of the sale price under the agreement. Section 4(1-A) provides that the agreement should be in the prescribed form and to contain several matters mentioned therein. The terms and conditions of the agreement recited that the purchaser agreed to purchase and acquired from the builders a flat admeasuring about 473 sq. ft. carpet area for the price of Rs. 3,75,000/- which had been paid in the manner set out therein. If there is default in the matter of payment of any of the instalments, the amount paid by the purchasers to the builders under the agreement would stand forfeited. However, an option was also reserved by the builders to regularise on payment of interest at 25% on such defaulted amounts.