Boardo Revenue Vs. A. M. Ansari 
Insc 55 (17 March 1976)
SINGH, JASWANT SINGH, JASWANT RAY, A.N. (CJ)
BEG, M. HAMEEDULLAH
CITATION: 1976 AIR 1813 1976 SCR (3) 661 1976
SCC (3) 512
CITATOR INFO :
R 1976 SC1860 (10) E&D 1985 SC1293 (115)
R 1988 SC1845 (11)
Indian Stamp (Andhra Pradesh Extension and
Amendment) Act XIX of 1959-Arts. 31(c) and 35(c)-Scope of-Lease and
Sales Tax-Whether payable on annual auction
Under the terms and conditions of sale the respondents,
who were the highest bidders at an auction of forest produce, were called upon
to pay stamp duty on the agreements to be executed by them as if they were
leases of immovable property falling under Art. 31(c) and on the deposits of
security as mortgages under art. 35(c) of the Indian Stamp Act, 1899 as also
sales tax on the bid amounts.
In a petition under art. 226, the respondents
contended that the right to pluck, collect and take away the forest produce was
not a right or interest in immovable property within the meaning of art. 31(c)
of the Stamp Act, the security deposits were not mortgages nor did the
Government carry on any business of sale and, as such, they were not liable to
pay the amounts demanded. The High Court allowed the petitions.
Dismissing the State's appeal,
HELD : The acquisition by the respondents not
being an interest in the soil but merely a right to cut the fructus naturales,
the agreements possessed the characteristics of licences and did not amount to
leases so as to attract the applicability of art. 31 (c) of the Stamp Act.
[667D] Firm Chhotabhai Jethabai Patel & Co. & Ors. v. The State of
Madhya Pradesh,  S.C.R. 476 and Mahadeo v.
State of Bombay 1959 S.C.J. 1021: A.I.R. 1959
S.C. 735 referred to.
(1) A study of the definitions of immovable
property occurring in the Transfer of Property Act, the Registration Act and
the General Clauses Act shows that it is the creation of an interest in
immovable property or a right to possess it that distinguishes a lease from a
licence. A licence does not create an interest in the property to which it
relates while a lease does. In the case of a lease there is transfer of a right
to enjoy the property. For the purpose of deciding whether a particular grant
amounts to a lease or a licence, it is essential to look to the substance and
essence of the agreement and not to its form. [665F-G] Associated Hotels of
India Ltd. v. R. N. Kapoor A.I.R.
1959 S.C. 1262; Kauri Timber Company Limited
v. The Commissioner of Taxes,  A.C. 771 (776) Marshall v.
Green (1875) L.R.I.C.P.I.D. 35 and Firm
Chhotabhai Jethabai Patel & Co. & Ors. v. The State of Madhya Pradesh
 S.C.R. 576 referred to.
Mahadeo v. State of Bombay 1959 S.C.J. 1021:
AIR 1959 S.C. 735 distinguished.
In the instant case the salient features
emerging from the agreements are (i) that they were made for a short duration
of 9 to 10 months; (ii) they did not create any estate or interest in the land
and (iii) the respondents were not granted exclusive possession and control of
the land but were merely granted the right to pluck, cut, carry away and
appropriate the forest produce, present or future.
The right to go on the land was only
ancillary to the real purpose of the contract. [667C-D] 662 (2) The respondent
could not be called upon to pay stamp duty under Art. 35(c) of the Stamp Act.
For an instrument to fall within the definition of mortgage deed contained in
s. 2(17) of the Stamp Act it is necessary that it should satisfy the essential
conditions by creating a right over or in respect of a specified property in
favour of another person. [671D; 670G] In the instant case there is nothing in
the relevant clause of the sale notice to indicate that any right over or in
the security deposits was created in favour of the State Government. [671A]
Reference under Stamp Act, Section 46 15 I.L.R. Mad.
134 and Rishidev Sondhi v. Dhampur Sugar
Mills A.I.R. 1947 All. 190 F.B. approved.
(3) (a) The respondents were not liable to
pay sales tax. It cannot be said that the Government, by holding auction of
forest produce, carried on business in the sale of that class of goods, which
is an essential condition to make the respondents liable to pay sales tax.
[670D] State of Gujarat v. Raipur Manufacturing Co. Ltd.
(1967) 19 S.T.C. 1(S.C.) followed.
(b) The consideration of profit motive cannot
be regarded as an essential ingredient of the term 'business' in view of the
amendment in the definition of 'dealer' in 1966. The auctions were carried on
only annually and not at frequent intervals. The important element of frequency
being lacking it cannot be held that the Government was carrying on the
business of sale of forest produce. [669D-E] P.T.C.C.S. Merchants Union v.
State of A.P., (1958) 2 An. W.R. 100: (1958) 9 S.T.C. 723; Raja Bhairabendra v.
Superintendent of Taxes (1958) 9 S.T.C. 60; Orient Paper Mills Ltd. v. The
State of Madhya Pradesh and Ors. (1971) 28 S.T.C. 532; Deputy Commissioner of
Agricultural Income-Tax and Sales Tax, Quilon v. Travancore Rubber and Tea Co.
(1967) 20 S.T.C. 520 (S.C.); Deputy
Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Midland Rubber
and Produce Co. Ltd.  25 S.T.C. 57 (S.C.) Ramakrishna Deo v. The
Collector of Sales Tax, Orissa (1955) 6 S.T.C. 674 referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeals
Nos. 67 to 122 and 238 of 1969.
From the Judgment and Decree dated the
21-8-67 of the Andhra Pradesh High Court in Writ Petitions Nos. 489, 491, 537,
538, 539, 540, 541, 561, 635, 636, 638, 639, 677, 684, 686, 688, 695, 710, 711,
712, 713, 714, 715, 716, 717, 718, 719, 811, 812, 813, 830, 831, 832, 853, 854,
855, 867, 870, 1146, 1216, 1219, 1260, 1261, 1265, 1284, 1285, 1292, 1293,
1294, 1309, 1310, 1340, 1446, 1447, 1697 and 687 of 1967 respectively.
P. Ram Reddy, B. Parthasarthi for the
K. J. John and J. B. Dadachanji for
Respondent in CAs.
67, 78, 79, 100, 101, and 103 of 1969.
G. Narayana Rao for Respondent in CAs.
H. K. Puri and R. V. Pillai for Respondents
in CAs Nos.
77, 83, 89, 90, 93, 95, 96, 102 and 120/69.
The Judgment of the Court was delivered by
JASWANT SINGH, J.-This bunch of Civil Appeals Nos. 67- 122 238 of 1969 by
certificate granted under Article 133(1)(b) of the Constitution by the High
Court of Judicature of Andhra Pradesh at 663 Hyderabad by its order dated June,
28, 1968 against its common judgment and order dated August 21, 1967, passed in
Writ Petition Nos. 489, 491, 537 to 541, 635, 684, 685, 687, 688, 830 to 832,
561, 1219, 715 to 719, 812, 813, 1216, 677, 638, 639, 695, 853 to 856, 636,
867, 870, 1146, 1285, 1260, 1261, 1284, 1292, 1293, 1294, 1309, 1310, 1340,
1447, 1697 and 1265 of 1967 which raise interesting questions of law relating
to the interpretation of some of the provisions of the Indian Stamp Act, 1899
and the Andhra Pradesh General Sales Tax Act, 1957 shall be disposed of by this
The facts giving rise to these appeals are:
The Forest Department of the Government of Andhra Pradesh after giving a sale
notice held, in accordance with the terms and conditions thereof, an auction in
1967 in respect of various items of forest produce viz. timber, fuel, bamboos,
minor forest produce, beedi leaves, tanning barks, parks mohwa etc. Clause 23
of the notice inter alia required the contractors to pay within 10 days of the
receipt of the confirmation orders of the competent authority: (a) the balance
of the 1st instalment amount, as might be fixed by the Divisional Forest
Officer, (b) 6 1/4% of the bid amount as security deposit; (c) sales tax on the
bid amount at the rates current at the time of the sale. Clause 60 of the
notice provided that the contractors would at all times comply with the
provisions of the Indian Stamp (Andhra Pradesh Extension and Amendment) Act XIX
of 1959, and the Andhra Pradesh Court Fees and Suits Valuation Act, 1956, and
all the rules that might, from time to time, be in force thereunder.
The respondents herein being the highest
bidders in respect of some items of the forest produce were called upon to pay
in terms of the above noted conditions the stamp duty on the agreements to be
executed by them as if they were leases of immovable property falling under
Article 31 (c) of the Indian Stamp Act, 1899. They were also called upon to pay
sales tax on the bid amount in terms of clause (23) of the sale notice. They
were further called upon to pay stamp duty on the deposits made by them by way
of security as mortgages, falling within Article 35(c) of the Stamp Act.
Aggrieved by the said notices, the
respondents filed the aforesaid petitions under Article 226 of the Constitution
for issue of appropriate writs etc. declaring the aforesaid demand notices as
illegal and void and restraining the appellants from enforcing or taking any
proceeding for the levy and recovery of the amounts mentioned therein. The
respondents contended before the High Court that as the right to pluck, collect
and take away beedi leaves and to cut and carry away bamboos, standing timber
etc. was not a right or interest in immovable property so as to attract Article
31(c) of the Stamp Act, there could be no question of payment by them of the
stamp duty. The respondents also challenged the demand made from them for
payment of sales tax on the bid amount on the ground that as the Government did
not carry on any business of sale, the demand was illegal. They further
challenged the demand of stamp duty under Article 35(c) of the Stamp Act
pleading that the security deposits were not mortgages so as to attract the
provisions of the said Article of the Stamp Act.
664 The petitions were contested by the
appellants herein who contended inter alia that pursuant to clause (60) of the
terms and conditions of the sale notice, the respondents were bound to pay the
stamp duties that were chargeable in view of the extension of the Indian Stamp
Act to the whole of the State of Andhra Pradesh by the Indian Stamp (Andhra
Pradesh Extension and Amendment) Act XIX of 1959 with effect from April 1,
1959, and repeal of the Hyderabad Stamp Act, and the rules, notifications,
instructions etc. made or issued there under: that the right acquired by the
respondents was not merely a right to collect, appropriate and sell beedi
leaves that had already grown but also the right to collect, use and sell beedi
leaves that would subsequently grow on the standing trees and their branches
taking nourishment from the land during the period of lease which showed that
the respondents obtained under the agreement an interest in immovable property.
The appellants further contended that the respondents were, according to the
sale notice, liable to pay sales tax on the bid amount as also the stamp duty
on security deposits which fell within the definition of mortgages as
contemplated by the Stamp Act.
On a careful consideration of the respective
stands of the parties, the High Court negatived the contentions of the
appellants and allowed the petitions. Aggrieved by the Judgment and order of
the High Court, the appellants applied for certificate under Article 133(1)(b)
of the Constitution which, as already stated, was granted to them. This is how
the appeals are before us.
Three questions fall for consideration in
these appeals. The first question that we are called upon to determine is
whether the agreements which the respondents were called upon to execute in
respect of the aforesaid rights relating to forest produce were in the nature
of leases or licences.
It is necessary in this connection to notice
at the outset the distinction between a lease and a licence by reference to the
relevant Acts. Section 2 (16) of the Stamp Act defines the lease as meaning a
lease of immovable property but this definition, it would be noted, is neither
exhaustive nor self-explanatory. We are, therefore, driven to find out the true
meaning of the term by turning to the Transfer of Property Act. Section 105 of
the said Act defines 'lease' as follows :- "A lease of immovable property
is a transfer of a right to enjoy such property, made for a certain time,
express or implied, or in perpetuity in consideration of a price paid or
promised, or of money." 'Licence' is defined in section 52 of the Easement
Act, 1882 as under:- "Where one person grants to another, or to a definite
number of other persons, a right to do, or continue to do, in or upon the
immovable property of the grantor, something which would, in the absence of
such right, be unlawful, and such right does not amount to an easement or an
interest in the property, the right is called a licence".
665 The expression 'immovable property' is
not defined in the Stamp Act but is defined in section 3 of the Transfer of
Property Act, section 2(6) of the Registration Act and section 3(26) of the
General Clauses Act. An idea as to the meaning of the expression can also be
gleaned from section 2(7) of the Sales of Goods Act. According to learned counsel
for the appellants, it is the definition of 'immovable property as given in
section 3 (26) of the General Clauses Act that has to be applied in
determining. whether the agreements in question fall within the definition of
'lease' or not. It would be useful at this stage to set out in juxtaposition
the definitions of 'immovable property' as contained in the aforesaid Acts, as
also the definition of goods as given in the Sale of Goods Act:-
------------------------------------------------------------ Section 3(26) of
Section 3 of Section 2(6) of Section 2(7) General Clauses Transfer of
Registration Sale of Act. Property Act. Act. Goods Act.
"Immovable pro- In this Act, "Immovable pro- In this Act, perty"
shall unless there perty" includes unless there include land, is something
land, buildings is anything benefits to repugnant in hereditary repugnant in
arise out of the subject allowances, the subject land, and or context rights to
or context, things attached "immovable ways, lights, "goods" to
the earth, property" ferries, or means every or permanently does not any
other bene- kind of mov- fastened to any- include stand- fits to arise able
pro- thing attached ding timber, out of land, perty other to the earth. growing
crops and things than action- or grass. attached to the table claims earth or
per- money; and manently fas- includes ened to any- stock and thing which is
shares, grow attached to the in crops, earth, but not grass and standing timber
things atta- growing crops ched to or nor grass. forming part of the land which
are agreed to be severed before or under the contract or sale.
A close study of the above definitions shows that it is the creation of an
interest in immovable property or right to possess it that distinguishes a
lease from a licence. A licence does not create an interest in the property to
which it relates while a lease does. There is in other words transfer of a
right to enjoy the property in case of a lease. As to whether a particular
transaction creates a lease or a licence is always a question of intention of
the parties which is to be inferred from the circumstances of each case. For
the purpose of deciding whether a particular grant amounts to a lease or a
licence, it is essential, therefore, to look to the substance and essence of
the agreement and not to its form. We are fortified in this view by the
decision of this Court in Associated Hotels of India Ltd. v. R. N. Kapoor where
Subba Rao, J. (with whom Das, J.
"If a document gives only a right to use
the property in a particular way or under certain terms while it remains in
possession and control of the owner thereof, it will be a licence. The legal
possession, therefore, continues to be 666 with the owner of the property, but
the licensee is permitted to make use of the premises for a particular purpose.
But for the permission, his occupation would be unlawful. It does not create in
his favour any estate or interest in the property. There is therefore, clear
distinction between the two concepts. The dividing line is clear though
sometimes it becomes very thin or even blurred. At one time it was thought that
the test of exclusive possession was infallible and if a person was given
exclusive possession of a premises, it would conclusively establish that he was
But there was a change and the recent trend
of judicial opinion is reflected in Errington v. Errington  1 All ER 149,
wherein Lord Denning reviewing the case law on the subject summarizes the
result of his discussion thus at p. 155:
"The result of all these cases is that,
although a person who is let into exclusive possession is, prima facie, to be
considered to be tenant, nevertheless he will not be held to be so if the
circumstances negative any intention to create a tenancy." The Court of
Appeal again in Cobb v. Lane  I All ER 1199, considered the legal
position and laid down that the intention of the parties was the real test for
ascertaining the character of a document. At p. 1201, Somervell L.J., stated:
"..... The solution that would seem to
have been found is, one would expect, that it must depend on the intention of
Denning L.J. said much to the same effect at
"The question in all these cases is one
of intention: Did the circumstances and the conduct of the parties show that
all that was intended was that the occupier should have a personal privilege
with no interest in the land?" The following propositions may, therefore,
be taken as well-established: (1) To ascertain whether a document creates a
licence or lease, the substance of the document must be preferred to the form:
(2) the real test is the intention of the parties-whether they intended to
create a lease or a licence; (3) if the document creates an interest in the
property, it is a lease; but, if it only permits another to make use of the
property, of which the legal possession continues with the owner, it is a
licence; and (4) if under the document a party gets exclusive possession of the
property, 'prima facie' he is considered to be a tenant, but circumstances may
be established which negative the intention to create a lease." The
crucial tests to be employed in cases of the present nature can be gathered
from the observations made by Lord Shaw while delivering the judgment of the
Board in Kauri Timber Company Limited v.
667 The Commissioner of Taxes(1). According
to those observations, in order, an agreement can be said to partake of the
character of lease, it is necessary that the grantee should have obtained an
interest in and possession of land.
If the contract does not create an interest
in land then to use the words of Lord Coleridge, C.J. in Marshall v.
Green(2) the land would be considered as a
mere warehouse of the thing sold and the contract would be a contract for
For the purpose, therefore, of ascertaining
the intention of the parties and finding out the character of the agreements in
question, it is necessary to notice the salient features of the agreements. The
first salient feature of the agreements is that they were for a short duration
of nine to ten months. The second important feature of the agreements is that
they did not create any estate or interest in land. The third salient feature
of the agreements is that the respondents were not granted exclusive possession
and control of the land but were merely granted the right to pluck, cut, carry
away and appropriate the forest produce that might have been existing at the
time of the contract or which might have come into existence during the short
period of the currency of the agreements.
The right to go on the land was only
ancillary to the real purpose of the contract. Thus the acquisition by the respondents
not being an interest in the soil but merely a right to cut the fructus
naturales, we are clearly of the view that the agreements in question possessed
the characteristics of licences and did not amount to leases so as to attract
the applicability of Article 31(c) of the Stamp Act.
The conclusion arrived at by us gains
strength from the judgment of this Court in Firm Chhotabhai Jethabai Patel and
Co. & Ors. v. The State of Madhya Pradesh where contracts and agreements
entered into by person with the previous proprietors of certain estates and
mahals in the State under which they acquired the rights to pluck, collect and
carry away tendu leaves, to cultivate, culture and acquire lac, and to cut and
carry away teak and timber and miscellaneous species of trees called hardwood
and bamboos were held in essence and effect to be licences.
There is, of course a judgment of this Court
in Mahadeo v. State of Bombay(4) where seemingly a somewhat different view was
expressed but the facts of that case were quite distinguishable. In that case
apart from the bare right to take the leaves of tendu trees, there were further
benefits including the right to occupy the land, to erect buildings and to take
away other forest produce not necessarily standing timber, growing crop or
grass and the rights were spread over many years.
For the foreging reasons, the first question
has to be decided in favour of the respondents.
The second question that falls for
consideration is whether the respondents could be validly called upon to pay
the sales tax. For 668 the decision of this question, it is necessary to
examine a few provisions of the Andhra Pradesh General Sales Tax Act, 1957. The
charging section is section 5 which in so far as it is relevant for the purpose
of these appeals runs thus:- "5. Levy of tax on Sales or Purchases of
Goods:- (1) Every dealer (other than a casual trader and an agent of a
non-resident dealer) whose total turnover for a year is not less than Rs.
25,000 and every agent of a nonresident dealer whatever be his turnover for the
year, shall pay a tax for each year, at the rate of four paise on every rupee
of his turnover:
"Every casual trader shall pay a tax at
the rate of four paise on every rupee of his turnover:
Provided that a dealer in jaggery shall pay a
tax at the rate of two paise on every rupee upto the 31st March 1966 and at the
rate of three paise on every rupee on and from the 1st April 1966, of his
turn-over irrespective of the quantum of turnover".
The term 'dealer' has been defined in section
2(e) of the Act as follows:- "dealer" means any person who carries on
the business of buying, selling, supplying or distributing goods, directly or
otherwise, whether for cash, or for deferred payment, or for commission,
remuneration or other valuable consideration, and includes (i) the Central
Government, a State Government, local authority, a company, a Hindu undivided
family or any society (including a co-operative society), club, firm or
association which carries on such business ......" The term 'business' has
been defined in section 2(bbb) of the Act as follows:- " 'business'
includes-(i) any trade, commerce, or manufacture or any adventure or concern in
the nature of trade, commerce or manufacturing whether or not with trade,
commerce, manufacture, adventure concern is carried on or undertaken with a
motive to make gain or profit and whether or not any gain or profit accrues
therefrom; and (ii) any transaction in connection with, or incidental or
ancillary to, such trade, commerce, manufacture, adventure or concern".
'Sale' is defined in section 2(n) thus:
'Sale' with all its grammatical variations
and cognate expressions means every transfer of the property in goods by one
person to another in the course of trade or business, for cash, or for deferred
payment, or for any other valuable consideration, and includes any transfer of
materials for money consideration in the execution of a 669 works contract
provided that the contract for the transfer of such materials can be separated
from the contract for the services and the work done, although the two
contracts are embodied in a single document or in the supply or distribution of
goods by a society (including a co-operative society), club, firm or
association to its members, but does not include a mortgage, hypothecation or
pledge of, or a charge on, goods".
In order that the sales tax should be payable
by the respondents in accordance with the obligation imposed on them by clause
(23) of the sale notice, it is necessary that the Government of Andhra Pradesh
should have been carrying on the business of selling the forest produce. In
State of Gujarat v. Raipur Manufacturing Co. Ltd., this court while examining
the term 'business' in another context observed that 'whether a person carries
on business in a particular commodity must depend upon the volume, frequency,
continuity and regularity of transactions of purchase and sale in a class of
goods and the transactions must ordinarily be entered into with a profit
motive. The Court further went on to observe that when a subsidiary product is
turned out in the factory of the assessee regularly and continuously and it is
being sold from time to time, an intention to carry on business in such product
may be reasonably attributed to the assessee. As the consideration of profit
motive cannot be regarded an essential constituent of the term 'business' in
view of the amendment introduced in the definition of the term 'dealer' in
1966, what we are left to consider is whether the other ingredients of the term
volume, frequency, continuity and regularity
of transactions of sale and purchase are satisfied in the instant cases. The
auctions of the forest produce by the Government of Andhra Pradesh are
admittedly carried on only annually and not at frequent intervals. Thus the
important element of frequency being lacking in the instant cases, it cannot be
held that the said Government was carrying on the business of sale of forest
produce. In P. T. C. C. S. Merchants Union v. State of A.P. where a person who
grew agricultural products and incidentally sold the same, it was held that no
sales tax was payable as it could not be said that the person carried on
business. A similar view was expressed in Raja Bhairabendra v. Superintendent
of Taxes where standing sal trees grown spontaneously in his Zamindari were
sold by the Zamindar by auction and the purchasers were permitted to fell the
trees and sell them after sawing and other processes.
In Orient Paper Mills Ltd. v. The State of
Madhya Pradesh & Ors. it was held that the State Government or the forest
department could not, merely by selling the forest produce grown on their land,
be regarded as carrying on any business of buying, selling, supplying or
distributing goods and therefore in respect of mere sales of forest produce,
neither the State Government nor the forest department was a dealer within the
meaning of the definition in section 2(d) of the M.P. General Sales Tax Act,
1958. In Deputy Commissioner 670 of Agricultural Income-tax and Sales Tax,
Travancore Rubber and Tea Co. and Deputy
Commissioner of Agricultural Income-tax and Sales Tax, Quilon v. Midland Rubber
and Produce Co. Lt. where the only facts established were that the assessee
converted the latex tapped from its rubber trees into sheets and effected a
sale of those sheets to its customers and the conversion of latex into sheets
was a process essential for the transport and marketing of the produce, it was
held that the department had not been able to discharge the onus of proving
that the assessee was carrying on business and was, therefore, a dealer within
the meaning of section 2(b) of the Central Sales Tax Act, 1956.
In Ramakrishna Deo v. The Collector of Sales
Tax, Orissa where Maharaja of Jeypore had sold the sal trees from his forest
for preparing sleepers, it was held that he was not a dealer within the meaning
of the Orissa Act because he was not carrying on the business of selling or
supplying the goods for the reason that the element of purchase, one of the
necessary ingredients of the business was absent.
In view of the foregoing discussion, we find
ourselves unable to hold that the Government of Andhra Pradesh by holding
auction of forest produce carried on business in the sale of that class of
goods. As such, the respondents could not be made liable to pay the sales tax.
There now remains for consideration only the
last question as to whether the security deposits made by the respondents were
in the nature of mortgages so as to make the respondents liable to pay the
stamp duty under Article 35(c) of the Stamp Act. For the determination of this
question, it is necessary to scrutinize the definition of 'mortgage deed' as
contained in section 2(17) of the Stamp Act which runs thus:- "2(17).
Mortgage-deed includes every instrument whereby, for the purpose of securing
money advanced, or to be advanced, by way of loan, or an existing or future
debt, or the performance of an engagement, one person transfers, or creates to,
or in favour of, another, a right over or in respect of specified
A bare perusal of the above definition makes
it clear that in order that an instrument should fall within the above
definition, it is necessary that the instrument should satisfy the essential
conditions by creating a right over or in respect of a specified property in
favour of another person.
Bearing in mind the above mentioned essential
requisites of a deed of mortgage let us examine clause (17) of the sale notice
to which alone our attention has been invited. Clause (17) runs thus:-
"Earnest money deposit to be returned-The earnest money deposits of all
bidders except those of the successful bidders collected at the time of sale
according to condition 5 above, will be returned to the depositors, on the
conclusion 671 of the sales provided that the officer conducting the sale, may
if he considers it advisable, retain the deposits of any bidders".
There is nothing in the above clause to
indicate that any right over or in the security deposits was created in favour
of the State Government.
In Reference under Stamp Act, section 46(1)
where a licence issued to an arrack renter expressly required as one of its
conditions that the licensee should deposit a sum equal to three months' rental
as a security for the due performance of the contract and the licensee executed
a muchalka stating that he agreed to all the terms and conditions mentioned in
the licence, it was held that neither the licence nor the muchalka taken
separately or together fulfilled the conditions of a mortgage as defined in the
Stamp Act i.e., neither thereby actually created an interest in the deposit in
favour of the Government.
In Rishidev Sondhi v. Dhampur Sugar Mills it
was held that an instrument in which specific sums have been offered as
security is not a mortgage deed within the meaning of section 2(17) as money is
not `specified property'.
In view of the above we have no manner of
doubt that the respondents could not be called upon to pay the stamp duty under
Article 35(c) of the Stamp Act.
In the result the appeals fail and are hereby
dismissed with costs.
P.B.R. Appeals dismissed.