BAMDEV NAYAK CLASS I CONTRACTOR REP. BY BAMDEV NAYAK, M/S. NEELADRI ENTERPRISES REP. BY ITS MANAGING PARTNER MR. BAMDEV NAYAK AND M/S. BINCO CONSTRUCTIONS PVT. LTD. REP. BY ITS MANAGING DIRECTOR MR. BAMDEV NAYAK Vs. STATE OF KARNATAKA REP. BY IT

JUDGEMENT

(1.) THE petitioners are before this Court praying to strike down Article 6(1)(a)(v) of the Karnataka Stamp Act as being violative of Article 14 of the Constitution insofar as the petitioners are concerned. The first petitioner claims to be a Class -I Contractor engaged in carrying out major civil works for Government Departments, Corporations etc., for the last several years. The second petitioner is a partnership firm carrying on commercial activities. They have developed residential and commercial complex in Bangalore. The third petitioner is incorporated under the provisions of the Companies Act and have executed major Civil Contract work for Government Departments and Corporations.

(2.) THE petitioners had approached the second respondent for financial assistance and the loan of Rs. 52.65 crores was sanctioned as per the details stated in the petition. In that regard, in order to secure the loan, the petitioners were required to create equitable mortgage of the immovable properties. Such document required payment of stamp duty. Prior to 31.03.2007, the stamp duty payable was 0.5% if the loan amount exceeded Rs. 10,000/ -. But with effect from 01.04.2007, Article 6 was amended as follows;

(3.) THE first respondent has filed the objection statement seeking to justify their action. It is averred that in the interest of the businessmen to enable them to avail loan facilities, the Stamp Duty at the first instance was reduced from 1% to 0.5% in respect of instruments specified in Article 6 of the Schedule with effect from 01.04.2003. The Government, thereafter with the intention of encouraging the loan facilities in respect of development of properties for the purpose of commercial and residential use has incorporated the 'proviso' to Article 6(1)(a) of the Schedule with effect from 01.04.2007. It is averred that inherent power of Government was exercised to allow reasonable classification on objective basis in public interest. It is their contention that in the case of Taxation greater latitude is available to the Legislature. If the loan is obtained for development of property for commercial or residential use, the loanee can avail the benefit of lower stamp duty as per the proviso to Article 6(1)(a) of the Act. The first respondent has accordingly sought to justify their action.