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PETITIONER: HANUMAN VITAMIN FOODS PVT.  LTD.  & ORS.

       Vs.

RESPONDENT: THE STATE OF MAHARASHTRA & ANR.

DATE OF JUDGMENT:       20/07/2000

BENCH: M B Shah, J.  & S.N.  Variava, J.

JUDGMENT:

S.  N.  VARIAVA,J.

This Civil Appeal is against the Judgment dated 16/17th February, 1989.   The  questions  raised in this Appeal are:-  (a)  whether transfer  of shares in a Co-operative Society is subject to  levy of  stamp  duty under the Bombay Stamp Act, 1958 and (b)  whether the  State  Legislature has legislative competence to levy  stamp duty  on  transfer  of shares.  Briefly stated the facts  are  as follows:   The  1st  Appellant  was a  member  of  Dalamal  Tower Promises  Co-  operative  Society Ltd.  As such  member  the  1st Appellant  was  the holder of 5 shares each  bearing  distinctive Nos.   711  to  715.   As such member the 1st  Appellant  was  in occupation  of  office premises No.  904 on the 9th floor of  the building  known as Dalamal Tower situated at 211, Nariman  Point, Bombay  400 021.  By an Instrument dated 31st March, 1986 the 1st Appellant  transferred  in favour of Appellants Nos.  2, 3, 4,  5 and  6 the said 5 shares for a consideration of Rs.   9,46,900/-. The  said  Instrument of Transfer, inter alia, set out  that  the Dalamal  Tower Premises Co-operative Society Ltd.  was the  owner of  the  building  Dalamal Tower;  that the 1st Appellant  was  a member  of the said society holding the said 5 shares;  that  one of the incidents of membership was that the member had a right to occupy specific Office premises in the building Dalamal Tower and as such the 1st Appellant had a right to occupy premises No.  904 on  the  9th  floor of the Dalamal Tower, which  Office  premises admeasured  557 Sq.  ft.  of built up area.  The Instrument  went on  to state that for a consideration of Rs.  9,46,900/- paid  by the transferees to the transferor, the transferor transferred the said  5  shares  to  the transferees  and  that  the  transferees accepted the said shares.

By  a  letter  dated 23rd April, 1986 the Advocates  of  the  1st Appellant   forwarded   the  instrument  of   transfer   to   the Superintendent of Stamps for adjudication under the provisions of Bombay  Stamp Act, 1958.  In the said letter the Advocates stated that,  in  their opinion, the instrument of transfer  was  wholly exempted  from duty, but that it was sent for adjudication by way of  abundant  caution.   By  a reply dated  22nd  May,  1986  the Superintendent  of  Stamps  informed the Advocates  for  the  1st Appellant  that the document for adjudication was a conveyance of property chargeable with stamp duty under Article 25(b)(i) of the Bombay  Stamp  Act  on  the  present market  value  of  the  said property.   By  the  said  Letter the  Superintendent  of  Stamps requested  for  details  regarding premises No.  904  in  Dalamal Tower  and also called for a valuation report and other  relevant documents.

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The  Appellants,  therefore, filed Writ Petition 1820 of 1986  in the  High  Court of Judicature at Bombay to have the said  letter quashed.   They also sought directions against the Superintendent of Stamps and the State of Maharashtra to desist and forbear from charging,  demanding or recovering stamp duty on the said form of Transfer of shares, or from proceeding on the basis that the form of  Transfer of shares was not duly stamped and, thus, liable  to be  impounded.   The Appellants contended that the instrument  of transfer  was  a document transferring the shares held in a  body corporate and was thus not within the purview of the Bombay Stamp Act,  1958.   They also contended that the levy of stamp duty  on transfer  of  shares in a co- operative society fell  exclusively within  Entry  91  of  List  I of the  Seventh  Schedule  to  the Constitution  of  India.   The Appellants contended that  it  was beyond the legislative competence of the State as it did not fall within  Entry  No.  63 of List II of the Seventh Schedule to  the Constitution of India.

By  the  impugned  Judgment  dated 16/17th  February,  1989,  the Petition  was  dismissed  on the ground that  the  instrument  of transfer  amounted to a conveyance of property and was chargeable with  stamp duty under Article 25(b)(i) of the Bombay Stamp  Act, 1958.   By  the  said  Judgment the argument  regarding  lack  of legislative competence was also rejected.

The   question  whether  or  not  a  transfer  of  shares  in   a Co-operative  Society  is  subject to levy of stamp duty  on  the basis  that it is a conveyance has already been answered by  this Court  in the case of Veena Hasmukh Jain and Another v.  State of Maharashtra and Ors., reported in (1999) 5 SCC 725.  In this case it has already been held that such agreements would be covered by Article  25 of the Bombay Stamp Act, 1958.  It is held that stamp duty  would be leviable as if it is a conveyance.  This Court has held  that  these  are  in effect agreements  to  sell  immovable property as the possession of such property is transferred to the purchaser before or at the time of or subsequent to the execution of  the agreement.  It is held such an agreement to sell must  be deemed  to  be  a Conveyance.  It is fairly  conceded  that  this Judgment fully covers question (a) set out hereinabove.

As  question  (a)  is  already answered by  the  above  mentioned Judgment  in  Veena’s  case, in our view, question (b)  does  not survive.   As seen above stamp duty is sought to be levied  under Article  25, Schedule I of the Bombay Stamp Act.  The stamp  duty is  being levied not on transfer of shares but on the basis  that the agreement is a conveyance.  There is no dispute that there is legislative competence in the State Government to levy stamp duty on  a conveyance of property.  Question No.  (b) has been  raised on  the  footing  that the instrument of transfer is  a  form  of transfer  of shares.  Now that it is held that such an instrument is not an instrument of transfer of shares, but it is, in fact, a conveyance question (b) no longer survives.

In  this  view of the matter, the Appeal does not  survive.   The same stands dismissed.  There will be no order as to costs.