Toll collection agreement treated as a lease under the Stamp Act, attracting stamp duty as lease money rather than a security bond.

An auction-cum-lease granting exclusive toll-collection rights for a fixed term against a fixed annual payment was treated as a lease under Section 2(16)(c) of the Indian Stamp Act, 1899, because the statute expressly includes instruments by which tolls are let. The monthly instalments were characterised as lease money for the toll rights, not as security for performance of the contract. The instrument was therefore chargeable to stamp duty under Article 35(b) of Schedule I-B, and not as a security bond under Article 57, which applies only to instruments executed for due performance of an obligation.

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Issues: Whether an agreement granting exclusive right to collect toll tax under an auction-cum-lease arrangement is a "lease" within Section 2(16)(c) of the Indian Stamp Act, 1899 and chargeable to stamp duty under Article 35(b) of Schedule I-B, or whether it is merely a security bond chargeable under Article 57 of Schedule I-B.

Analysis: The instrument and the auction notice showed that the successful bidder was granted exclusive right to collect toll for a fixed period against consideration of a fixed annual amount payable in instalments. Section 2(16) of the Indian Stamp Act, 1899 gives an inclusive definition of lease and specifically covers any instrument by which tolls of any description are let. On a proper construction of the agreement, the monthly amount was lease money for the toll rights and not a security for due performance of the contract. Article 35(b) of Schedule I-B applies to such a lease, whereas Article 57 applies only to security bonds or similar instruments executed for due performance of an obligation. The judgments relied upon by the High Court dealt with a different situation involving security for contract performance and were not applicable.

Conclusion: The agreement was a lease for collection of toll and was chargeable to stamp duty under Article 35(b) of Schedule I-B of the Indian Stamp Act, 1899, not under Article 57.

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