2010 (2) TMI 1326 - HC - Indian Laws

Transaction Under BOT Scheme Deemed 'Lease' Subject to Stamp Duty; M.P. Amendment Act, 2002 Upheld as Constitutional.

R.V. Infrastructure Engineers Pvt. Ltd. Versus State of M.P. and Ors.

The HC determined that the transaction under the BOT scheme constituted a 'lease' as per Section 105 of the Transfer of Property Act and Section 2(16) of ... - Issues Involved:1. Whether the transaction of granting the right to collect tolls under a Build, Operate & Transfer (BOT) scheme constitutes a 'lease' under Section 105 of the Transfer of Property Act, 1882, and Section 2(16) of the Indian Stamp Act, 1899.2. The constitutional validity of the amendment made in the proviso to the third clause of Article 33 of Schedule 1-A by the Indian Stamp (M.P.) Act, 2002.3. The legality of Sections 48 and 48B as amended by M.P. Act 24 of 1990.4. Whether the transaction should be classified as a 'license' rather than a 'lease.'5. The competence of the State Legislature to amend the Indian Stamp Act and prescribe stamp duty rates.6. The applicability of the decision of the Cabinet regarding the imposition of stamp duty.Detailed Analysis:1. Lease vs. License:The primary issue was whether the transaction under the BOT scheme constituted a 'lease' or a 'license.' The court examined the definitions under Section 105 of the Transfer of Property Act and Section 2(16) of the Indian Stamp Act. A 'lease' involves a transfer of a right to enjoy the property for a certain period with consideration, whereas a 'license' does not create an interest in the property. The court found that the agreement allowed the Concessionaire to collect tolls for fifteen years, which constituted a transfer of the right to enjoy the property. The agreement included elements of possession, consideration, and a fixed term, all indicative of a lease. The court concluded that the transaction was a 'lease' and not a 'license.'2. Constitutional Validity of Article 33 Amendment:The amendment to Article 33 of Schedule 1-A of the Indian Stamp Act by the M.P. Amendment Act, 2002, was challenged for being ultra vires. The court held that the amendment was within the legislative competence of the State as it pertained to prescribing stamp duty rates, which is a power conferred to the State under the Constitution. The amendment provided a specific rate of stamp duty for transactions under the BOT scheme, which was found to be consistent with the legislative framework.3. Legality of Sections 48 and 48B:Sections 48 and 48B of the Indian Stamp Act, as amended by the M.P. Act, were challenged for lacking a proper adjudication mechanism. The court found that these provisions were not arbitrary or unconstitutional. They provided a mechanism for the recovery of stamp duty and penalties, which was within the legislative competence of the State.4. Classification as Lease or License:The court analyzed whether the transaction should be classified as a 'license' rather than a 'lease.' The Concessionaire was given the right to collect tolls, maintain, and operate the road, which involved a transfer of interest in the property. The court emphasized that the nomenclature of the agreement was not decisive; instead, the substance and the rights conferred were crucial. The court held that the transaction was a 'lease' due to the transfer of interest and the right to enjoy the property.5. Competence of State Legislature:The court addressed the argument regarding the State Legislature's competence to amend the Indian Stamp Act and prescribe stamp duty rates. It was held that the State had the authority to legislate on stamp duties for instruments not specified in the Union List, as per the Constitution. The amendment was found to be within the State's legislative powers.6. Applicability of Cabinet Decision:The petitioners argued that the Cabinet had decided not to impose stamp duty on such transactions, and the amendment was brought later. The court held that the agreements were executed after the amendment came into force, and thus, the prevailing stamp duty rates at the time of agreement execution were applicable. The court dismissed the argument based on the Cabinet's prior decision.Conclusion:The court concluded that the transactions in question were leases under Section 105 of the Transfer of Property Act and Section 2(16) of the Indian Stamp Act. The amendment to Article 33 of Schedule 1-A by the M.P. Amendment Act, 2002, was not ultra vires. The writ petitions were dismissed, and the court upheld the classification of the transaction as a lease, subject to the applicable stamp duty.