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CASE NO.: Appeal (civil) 3707  of  1990

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

       Vs.

RESPONDENT: THE STATE OF MAHARASHTRA & ANR.

DATE OF JUDGMENT:       20/07/2000

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

JUDGMENT:

S. N. VARIAVA,J.

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   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) whethe r 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 premi es 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 fo 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 hold ng  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 Da amal 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 transfer es 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

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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  t  e 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 r garding premises No.  904 in Dalamal Tower  and  also  called for a valuation  report  and  other relevant documents.

   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 fr m 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 instrum nt 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  exclu ively  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 Co stitution 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  Maharashtr a 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 h ld 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  d  emed 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 be ing 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 n the  footing

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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.