http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

CASE NO.: Appeal (civil)  7305 of 2005

PETITIONER: Prasad Technology Park Pvt. Ltd.                                         

RESPONDENT: Sub Registrar & Ors.                                                     

DATE OF JUDGMENT: 08/12/2005

BENCH: S.B. Sinha & P.K. Balasubramanyan

JUDGMENT: J U D G M E N T  [Arising out of SLP (Civil) No. 16313 of 2004]

S.B. SINHA,  J :

       Leave granted.

       Whether execution of a supplementary agreement entered into by and  between the Appellant and the Third Respondent herein would amount to a  transfer so as to attract stamp duty payable in terms of Article 5(d) of the  Schedule appended to the Karnataka Stamp Act, 1957, consequent upon the  change of the name of the erstwhile company to the Appellant Company is  the question involved in this appeal.   

       The basic fact of the matter is not in dispute.  One  "Prasad Garments  Pvt. Ltd." was a company registered under the Companies Act, 1956.  On or  about 05.03.1999, it entered into a lease-cum-sale agreement with the Third  Respondent herein upon payment of premium of a sum of Rs.14,49,453,  which amounted to 99% of the tentative cost of the land and one yearly rent  of 966/- for a period of eleven years computed from 25.06.1997.         The  name of the said company, however, was changed to "Prasad Technology  Park Pvt. Ltd."     

       The Appellant presented the said instrument for registration before the  First Respondent herein on a stamp paper of Rs.100/-. The First Respondent,  however, was of the opinion that the  stamp duty on the total amount of  the  original lease deed  as mentioned in the lease deed dated 05.03.1999 was  required to be paid.  In response to  a notice served in this behalf on the  Appellant, a show cause was filed contenting that the supplementary  agreement is merely a deed of  rectification.  The said contention was,  however, rejected by the Deputy Commissioner of Stamps by an order dated  26.10.2000, holding :

       "As per the above said amendment, the original  document, since the changes in the legal effect of the  instrument and hence the Supplementary agreement  document in question subjected to the entire material  alteration.  In this regard, it held in the similar cases in  AIR 1939 Cal. 181, AIR 1936 Rang. 136, 50 LW 746  (1939) 2 MLJ 683, the honourable courts held (recorded  in the Krishnamurthy’s Indian Stamp Act, or VII  Edition’s page 133 in Note 9).  Therefore, in the  present  "Amendment or Supplementary Agreement", it is opined  that the Fixed Deposit and annual rent as per Appendix  5(d), it is required to pay entire stamp fee.  Hence, the  following order :

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

                               ORDER

No.DR.I/47/00-01                                Dated 26.10.2000

       Taken into consideration of all the above said  points, I the Deputy Commissioner of Stamps, exercising  my power vested under Section 39 of the Karnataka  Stamps Act, 1957, the present Document of   "Supplementary Agreement" vide P.24/2000-01 dated  5.3.99 original document of Lease-cum-Sale Agreement  mentioned Fixed Deposit of Rs.14,49,593.00 and  Annual  rent of Rs.966-00 totaling to Rs.14,50,559.00 as per the  Appendix 5(d) has to pay Stamp fee of Rs.1,45,100.00  along with fine of Rs.5.00, totaling to Rs.1,45,105.00  hereby directed to make payment."

       Aggrieved by and dissatisfied therewith, a writ petition was filed by  the Appellant before the  Karnataka High Court, which came to be dismissed  by reason of an order dated 11.08.2003 passed by a learned Single Judge    opining :

"\005But unfortunately for the petitioner the supplementary  agreement sought to be registered as entered into  between the 3rd respondent Lessor and the petitioner  Lessee with the terms of the lease being the same as had  been in the earlier lease deed that had come to be  executed in favour of the petitioner-company in its earlier  name as evidenced by the agreement dated 5th March  1999.  These terms are sought to be incorporated  into the  subsequent agreement which is known as supplementary  agreement dated 24th April, 2000\005"      

The Appellant herein preferred an intra court appeal there-against,  which was also dismissed by the impugned judgment, stating :

       "In the instant case, earlier the name of the  appellant-Company was Prasad Garments Pvt. Ltd.,  which is now changed to Prasad Technology Park Pvt.  Ltd.  On account of change of name of the Company, a  supplementary agreement was entered into between the  M/s Karnataka Industrial Areas Development Board and  the appellant-Company.  So far as the argument of non- payment of stamp duty is concerned, the same is not  acceptable.  It cannot be said that the supplementary  lease agreement is also an instrument under which the  appellant-Company claims certain leasehold rights from  the Board, and therefore, it is liable to pay the stamp duty  and cannot escape payment of stamp duty.  The learned  Single Judge having found no illegality in the order of  the 2nd respondent, considering the material on record  and case laws relied on, by a detailed order, has  dismissed the writ petition.

       In our view, the appellant-Company cannot escape  its liability to pay the stamp duty under the  supplementary agreement since there is transfer of  interest in the Company, which the appellant-Company  can claim under the 3rd respondent\005."

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

       Mr. S.K. Kulkarni, the learned counsel appearing on behalf of the  Appellant, at the outset, drew our attention to the definition of instrument as  contained in Section 2(1)(j) of the Karnataka Stamp Act, 1957 and would  submit that having regard to the fact that no element of transfer was involved  in execution of the said supplementary agreement, Article 5(f)(i) of the  Appendix appended thereto would be attracted and not Article 5(d) thereof   as has been held by the Deputy Commissioner of Stamps.

       Mr. Sanjay R. Hegde, the learned counsel appearing on behalf of the  First and Second Respondents, on the other hand, would submit that having  regard to the fact that the nature of business of the company was also altered  inasmuch as whereas by the earlier instrument the demise of the premises  was made only for the purpose of manufacture of readymade garments and  leather garments, the lessee now  has been permitted to establish a software  park; the instrument in question must be held to be one of lease.  Our  attention, in this behalf, has been drawn to clauses 2(n) and 2(q) of the  original deed of lease, which are as under :

       "2(n)  To use the demised premises only for the  purpose of Manufacture of Ready Made Garments or  Leather Garments factory/industry and not to use the  demised premises or any part thereof for any other  purpose nor for the purposes of any factory which may  be obnoxious, or offensive by reason of emission of  odour,  liquid  ’effluvia’, dust, smoke, gas, noise  vibrations or fire hazards.

       2(q)    The Lessee shall not alienate the demised  premises or any part thereof or the building, that may be  constructed thereon during the period of lease.  The  Lessee may mortgage the right, title and interest in the  demised premises in favour the Government of  Karnataka or the Central Government or Corporate  bodies like Life Insurance Corporation of India,  Karnataka State Industrial Investment and Development  Corporation, Karnataka State Financial Corporation,  Industrial Finance Corporation of India, Industrial  Development Bank of India, Industrial Credit and  Investment Corporation of India, Unit Trust of India,  Trustees of Debenture Stock of Banks to secure moneys  advanced by such Government or bodies for the erection  of building, plant and machinery.  However, the Lessee  shall obtain the No Objection Certificate from the Lessor  in writing for creation of second and subsequent  charges."

       Change of the name of a company can be allowed by the Registrar of  the Companies in terms of Section 21 of the Companies Act.  Once such a  name is permitted to be  changed, a certificate is issued in terms of Section  23 thereof.  

The Appellant indisputably was permitted by the Third Respondent  herein to establish a software park.  The execution of supplementary  agreement, it has categorically been stated, became necessary consequent  upon the change in the name of the company.  By reason of such  supplementary agreement although it was permitted to establish a software  park but by reason thereof no fresh transaction was entered into.  We have  noticed hereinbefore that in terms of the aforementioned agreement dated  05.03.1999, the land in question was demised for a period of eleven years  with effect from 25.06.1997 on payment of premium fixed thereunder as  also on yearly lease rent stipulated thereby.   

       The said lease indisputably was governed by Section 105 of the  Transfer of Property Act.  By reason of the supplementary agreement, a

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4  

restrictive covenant has been amended in terms whereof the Appellant  herein was permitted to carry on the business of a Technology Park instead  of manufacture of readymade garments/leather garments.  Only because the  name of the company was changed, the same would not mean that a fresh  transaction took place.  Having regard to the change in the name of the  company, the Appellant’s name was sought to be substituted in the original  agreement. The period of the lease, the quantum of the premium paid and  other terms and conditions remained unaltered except the restriction  contained in clause 2(q) of  the said deed, was removed.  By reason of mere   change of user from carrying on one business to another, it is trite, a fresh  transaction does  not take place.  The terms and conditions of the lease can  be changed by mutual consent.  Unless the essential ingredients thereof as  contained in Section 105 of the Transfer of Property Act are not altered, it  cannot be said that the parties to the contract entered into a fresh transaction.   The Third Respondent merely reserved unto itself a right of reentry on  expiry of the said period of eleven years.  It could in terms of the covenant  of the lease also extend the period of  tenancy or terminate the same.  Unless  the lease itself came to an end, the third respondent did not have any right to  re-convey the property.  By reason of mere change in the name of the  company "Prasad Garments Pvt. Ltd." the erstwhile lessee also cannot be  held to have transferred its leasehold interest in favour of the Appellant  herein.

       Section 2(i)(j) of the Act, defines ’instrument’,  to mean : "2(1)(j) "Instrument" includes every document and  record created or maintained in or by an electronic  storage and retrieval device or media by which any right  or liability is, or purports to be, created, transferred,  limited, extended, extinguished or recorded;"

       Execution of an instrument which would attract payment of stamp  duty in terms of Article 5(d) of the Act must involve  transfer of  the   property or otherwise a right or liability may inter alia be created, transferred  etc., as envisaged in Section 3 thereof.  Once it is held that the  supplementary agreement is neither a deed of lease nor a deed of sale within  the meaning of Section 105 or Section 54  of the Transfer of Property Act, as  the case may be,  Article 5(d) of the schedule to the Act will have no  application.  If Article 5(d) has no application, indisputably the residuary  clause contained in Article 5(f)(i) would  have.  The Appellant admittedly  paid the stamp duty in terms thereof.

       It is now well settled that for the purpose of levy of stamp duty, the  real and true meaning of the instrument must be ascertained. [See The  Madras Refineries Ltd. v. The Chief Controlling Revenue Authority, Board  of Revenue, Madras  (1977) 2 SCC 308].            The High Court held that ’the supplementary lease agreement cannot  be said to be  an instrument whereunder the Appellant-Company claims  certain leasehold from the Board’;  but having did so, the High Court was  not correct in holding that it is liable to pay the stamp duty.               Having regard to the fact that the entity of the Appellant cannot be  said to be totally  different from Prasad Garments Pvt. Ltd. and as by reason  of the supplementary agreement, no fresh transaction has been entered into,  the impugned judgment cannot be sustained, which is set aside accordingly.   The appeal is allowed.  The Appellant shall be entitled to costs.