STATE OF MAHARASHTRA AND ORS. versus ATUR INDIA PVT. LTD.

Citation: [1994] 1 S.C.R. 881 · Decided: 11-02-1994 · Supreme Court of India · Bench: M.N. VENKATACHALIAH, S. MOHAN

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Judgment (excerpt)

STATE OF MAHARASHTRA AND ORS. 
A 
v. 
ATUR INDIA PVf. LTD. 
FEBRUARY 11, 1994 
[M.N. VENKATACHALIAH, C.J. AND S. MOHAN, J.) 
B 
Bombay Stamp Duty Act, 1958: Sections 2(n), 3, Schedule I-Article 
36. 
Tender inviting offers for lease of plot-Acceptance of lease tender C 
without effecting actual demise-Agreement terms not proving relationship of 
lessor and lessee-Agreement held not of lease but only agreement to 
lease-Such an agreement does not fall under section 2(n) and not chargeable 
to duty. 
Agreement to lease-Clause prohibiting trans/ er or assignment of D 
rights-When such clause is not enforced benefit under it can be assigned. 
Transfer of Property Act, 1882: Section 105. 
Agreement to lease-Agreement of leas~istinction between. 
The appellant-State issued notice on 30.11.1970 inviting offers for 
lease of a plot for putting up multi-storeyed building thereon. The notice 
stipu~ated that (i) the use of building was for private residence only; (ii) 
E 
the lessee would be put in possession of the plot on his executing the 
agreement to lease; and (iii) the lessee was debarred either directly or F 
indirectly from transferring, assigning or encumbering or parting with 
interest under the agreement. The respondent made an offer on 15.12.70 
and in its accompanying questionnaire jQrm specifically stated that the 
offer was made as a promoter as the cbll.pany propose to construd the 
building on the plot and sell the flats on ownership basis and the prospec-
tive purchasers would form a cooperative society to which the rights of G 
company including the rights of lease would be transferred. By its letter 
dated 1.1.1971, the Collector informed the respondent that the Government 
had accepted its tender for lease, but also stated that the actual demise 
was not affected to. Thereafter, the respondent requested the appellant for 
execution of lease in favour of sociefy which was specifically acceded to by H 
881 
882 
SUPREME COURT REPORTS 
[1994) 1 S.C.R. 
A 
the Collector. However, subsequently, the Collector impounded correspon-
dence between the parties on the ground that the agreement arrived at 
between them amounted to lease under Article 36 of the Bombay Stamp 
Duty Act, 1958 and accordingly demanded stamp duty on the basis that 
there was a lease from the Govt. to the society. 
B 
The respondent filed a writ petition in the High Court which held 
that the demand was legal as Article 36 of Schedule-I of the Act was 
applicable to the case. On appeal, the Division Bench of the High Court 
held that the agreement between the parties was agreement to lease; but 
)-
that agreement was not for the benefit of the respondent but for the 
C cooperatin society. Accordingly, it reversed the decision of the Single 
Judge, quashed the demand and directed the State Govt. to execute lease 
in favour of society. 
In appeal to this Court, it was contended on behalf of the State that 
having regard to the terms of agreement, it was clear that there could not 
D be any assignment of benefit of contract. 
On behalf of the respondent it was contended that (i) the c!ause 
debarring the licencee either directly or indirectly from transferring or 
assigning interest under the agreement was never enforced and, therefore, 
E it was open to the respondent to assign benefit in favour of society to which 
the Collector ·gave bis consent; and (ii) what was agreed between the 
parties was nothing more than an agreement to lease which required 
neither registration nor was it chargeable to duty. 
F 
G 
Dismissing the appeal, this Court 
HELD: 1. The facts mentioned are clearly indicative of an agreement 
to lease and nQt an agreemen( Of lease. The notice of the 'appellant, the 
offer of the respondent and the acceptance of the Collector of the tender 
of respondent for lease merely constitute an agreement to lease. Clause 13 
of the agreement clearly contemplates that the licensee will be put in 
possession of the plot on his executing the agreement to lease. Therefore, 
it is cle?r that by the respondent accepting the offer, the relationship of 
lessor and lessee between the appellant and the respondent had not come 
to be established. Further, there was no actual demise on the date of the 
accepting of tender. Therefore, it is only an agreement to lease. It does not 
H fall under section 2(n) of the Bombay Stamp Duty Act, 1952 in which case, 
y 
STATE v. ATUR INDIA LTD. (MOHAN,J.] 
883 
it is not an instrument chargeable to duty and 

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