Maharashtra Vs. Atur India Pvt. Ltd.  INSC
112 (11 February 1994)
S. (J) Mohan, S. (J) Venkatachalliah, M.N.(Cj)
1994 SCC (2) 497 JT 1994 (1) 640 1994 SCALE (1)532
Judgment of the Court was delivered by MOHAN, J.- The respondent is a company
incorporated under the Companies Act. It carries on business of construction of
multi-storeyed buildings and selling tenements therein on ownership basis in
accordance with the provisions of Maharashtra Ownership Flats (Regulation of
the Promotion of Construction, Sale,
Management and Transfer) Act, 1963.
the year 1968, the Government of Maharashtra started reclamation work in the
area known as Backbay Reclamation area abetting Bombay City on the Coffee Parade and Nariman
Point. The object of reclamation was to provide for construction of multi-storeyed
buildings. The reclaimed land was divided into five blocks; each was given a
number; for Block No. 5, the appellant (State of Maharashtra) issued the invitation to the public to make offers for
purchase of plot of land for putting up multi-storeyed buildings. The plots and
structures were to be given on 99 years' lease at specified rates.
to the advertisement, the respondent offered to secure the plot. It made an
offer along with the letter dated December 15, 1970 in respect of Plot No. 46, Block
No. V, Backbay Reclamation Estate, measuring 2500 square metres.
respondent also filed a questionnaire as required to be filled in accordance
with the advertisement in which it was clearly mentioned that the offer was as
4.On January 1, 1971, the Collector of Bombay informed
the respondent that the State Government had accepted the tender for lease of
the plot at the rate of Rs 2225 per sq. metre. The respondent was also called
upon to make 499 payment of security deposit of Rs 75,000. This was complied
with. A guarantee bond was also furnished for a sum of Rs 3,04,000. A cheque of
Rs 300 was deposited towards the cost of preparation of agreement. In the
letter dated February
23, 1971, it was
stated, drawing the attention to the answer in the questionnaire that the
respondent was acting as a promoter and the lease might be granted in favour of
it was made clear that the company will be acting as the promoter and builder
for the aforesaid scheme. The lease of the plot will be taken in the name of
cooperative housing society. A specific request was made to the Collector to
make necessary provision for grant of lease in the name of the cooperative
society. On March 16,
1971, the Collector of
Bombay informed the respondent that the Government had sanctioned the lease of
the plot in favour of respondent as promoter of the cooperative society.
6.On June 21, 1972, the respondent informed the
Collector that it had agreed to sell the plots in the buildings and the
purchasers of the said flats would form a cooperative society under the name of
Basant Cooperative Housing Society Limited. The respondent informed the
Government that the cooperative society was registered. On July 30, 1974, the building was completed and
completion certificate was obtained. The Collector sent a reply dated December 13, 1977 informing the respondent.
receipt of this letter, a request was made that a deed of lease be prepared in
the name of the Navrang Basant Cooperative Housing Society Ltd. at the earliest
convenience. As the Secretary, Revenue Department, Ministry of Revenue &
Forests Department did not respond to the request, another letter was written
on February 17, 1978 relating to the demand for
execution of lease. On July 25, 1980, the Collector of Bombay informed the
respondent that a direct lease deed in respect of Plot No. 101 will be executed
in the name of cooperative housing society provided the respondent being the
confirming party subject to charging of premium under the following terms:
Amount equal to the stamp duty chargeable on a document between the original allottee
and the Government.
equal to the stamp duty chargeable on document of assignment by the original allottee
to the cooperative society, company etc. had the lease deed been executed with
the original allottee.
per cent of the unearned income i.e. 50 per cent of the difference between the
valuation of the land at the time of the original allotment and at the time of
case the lease deed is to be executed with cooperative society the date of
transfer for the purpose of determining the value of the land for purposes of
calculating the unearned income should be the date on which the society has
been registered. In the case of companies etc. also the same criteria should be
applied provided the company is registered on a date later to the date of
original allotment. Otherwise the date on which request for execution of 500 lease
in the name of such company etc. is made or the date on which the transfer has
expenses i.e. expenses on preparation of the agreement to lease which may be
done away with plus expenses on preparation of the lease deed which might have
been entered into which the original allottee as the case may be.
Registration charges with reference to (d) above."
respondent, thereafter addressed several communications informing the Collector
that the assumption that the company was transferring the leasehold interest in
favour of the cooperative housing society is entirely misconceived. It was
pointed out that right from the inception, it has been clearly held out that
the lease is to be executed in favour of the cooperative society formed by the
purchasers of the flats. The Collector specifically agreed to this course. It
was further stated that at the time of offer itself, it was disclosed that the
company was a promoter or builder and the lease was never to be executed in its
favour. Therefore, the Collector refused to pay any heed to the request made by
the respondent to execute the lease in favour of cooperative housing society
without demanding premises and imposing other conditions on the assumption that
the leasehold rights had to be transferred by the respondent in favour of
cooperative housing society.
9.On February 24, 1983, the Superintendent of Stamps
addressed to the respondent inter alia reciting that by virtue of certain
correspondence between the respondent and the Government of Maharashtra, the
respondent had agreed to abide by certain terms and conditions of lease to be
executed in respect of Plot No. 101. The letter further recited that the lease
had not been executed by the respondent. Therefore, the Superintendent claimed
that the agreement arrived at by correspondence between the respondent and the
Government of Maharashtra amounted to lease falling under Article 36 of the
Bombay Stamp Duty Act, 1958. On that basis, a demand for stamp duty for a sum
of Rs 1,86,175 was made. Failing to do so, it was stated that the same would be
recovered as arrears of land revenue. It was this which led to filing of Writ
Petition No. 2494 of 1983 before the High Court of Bombay.
learned Single Judge by judgment dated August 30, 1990 dismissed the petition in the view
that Article 36 of Schedule 1 of the Bombay Stamp Act, 1958 applied to the
case. The demand was legal. In fact, the respondent was not mere promoter. On
the contrary, the respondent was a nominee of the proposed cooperative housing
by the same, Appeal No. 1371 of 1990 was filed before the High Court. The
Division Bench by a judgment dated July 23, 1992 reversed the judgment of the
learned Single Judge. It was found that the correspondence between the
respondent and the Government spelt out an agreement to lease; but that
agreement was not for the benefit of the respondent but for the cooperative
housing society. It is not open to the State Government (appellant herein) to
refuse to execute lease in favour of the 501 cooperative housing society on the
ground that the correspondence sets out agreement between the Government of Maharashtra
and the respondent herein. Accordingly, the letter dated February 24, 1983 and the demand contained therein
was quashed. The appeal was allowed and a writ of mandamus was issued directing
the State Government to execute the lease in favour of Navrang Basant
Cooperative Housing Society Ltd.
is under these circumstances, the present appeal by special leave came to be
S.K. Dholakia, learned counsel for the State of Maharashtra should urge that an offer was invited on November 30, 1970. In Part II of that offer, memo of
terms and conditions for lease of Block V, Backbay Reclamation was enclosed.
Condition No. 7 specifically stated that the use of he building will be for
private residence only.
No. 13 stipulated at the licensee will be put in possession of the plot on his
executing the agreement to lease. More than this, under Condition No. 15, the
licensee was debarred either directly or indirectly from transferring,
assigning or encumbering or part with interest under or the benefit of the
agreement to lease of any part thereof in any manner without the previous
consent of the Government in writing. It further stipulated that the Government
will be free to refuse to such consent or grant it in its absolute discretion.
Equally, condition No. 16 stated that the lessee will not assign or part with
possession of the demised premises or any part thereof or transfer the lessee's
interest therein without the previous consent in writing of the lessor. having
regard to all these terms, it is clear that there cannot be any assignment of
benefit of contract. On December
15, 1970, the
respondent wrote a letter making this offer. The Government in its reply dated
1.1971 (sic) had stated that the Government has been pleased to accept the
tender for the lease at the rate of Rs 2225 per sq. metre. The request for
grant of lease in the name of cooperative society came to be made prior to the
registration of the society. The society was registered on June 21, 1972. For five years, no action was
taken which is rather strange. If really, the benefit of the contract was
intended for the cooperative society, there is no justification for maining
quiet for these long number of years. Therefore, as learned Single judge
rightly held that the contention on behalf of the respondent is purely
technical. What remained to be done was mere execution of a document. us, it is
clear the privity of the contract was between the State of Maharashtra and the respondent, the cooperative
society being nowhere in he picture.
opposition to this, Mr Harish N. Salve, learned counsel for the respondent
would urge that apart from answering the questionnaire on February 23, 1971, it was specifically stated that
the company proposed to construct the building on the above said plot and sell
the flats on ownership basis. Thereafter the purchasers of the flats will form
a cooperative housing society to which the rights of the company including the
right of lease of plot will be transferred. On that basis, the request was made
for granting the lease in the name of the said cooperative housing society.
This was the specific 502 request made to the Collector. On March 16, 197 1, the respondent received a letter
from the Collector stating that Government has sanctioned the lease of the
above plot in favour of the respondent as promoters of a cooperative housing
society. It was on this basis that the request was made on June 21, 1972 drawing the attention of the
Collector to the letter dated March 16, 1971
and permission was sought to transfer the rights, title and interest in favour
of Basant Cooperative Housing Society Ltd. After the formation of society, on December 13, 1977, the Government sanctioned the
request to transfer the rights, title and interest in Plot No. 101 to the Basant
Cooperative Housing Society.
bypassing all these, to merely go by the terms and conditions of a licence and
to contend that what was granted was a lease and nothing further remained
excepting the execution of a formal lease deed is not correct. When the tender
of the respondent was accepted, it was nothing more than an agreement to lease.
It is open to the respondent's society to assign the benefit under that
agreement. If really what was agreed to between the appellant State and the
respondent is nothing more than an agreement to lease it does not require registration.
The benefit of it can be assigned in favour of the cooperative society to which
the Collector gave his consent and permitted the transfer. Now to contend that
it was an agreement of lease and therefore, liable to stamp duty ignores the
important fact that throughout the respondent acted only as promoters with the
knowledge and consent of the appellant. Besides, clause 15, on which reliance
is placed now, was never enforced.
brief analysis of the facts may be made before we go to the legal aspect.
16.On November 30, 1970, a notice was issued inviting
offers for the lease of various plots from Block V, Backbay Reclamation Estate
which specifically mentioned Plot No. 46 (which is renumbered as Plot No. 101)
with which we are concerned. To the said notice was annexed in Part II, a memo
of terms and conditions for the lease. Clauses 7, 13, 15 and 16 are relevant
for our purposes and they are extracted below :
The user of the building will be for private residence only.
licensee will be put in possession of the plot on his executing the agreement
to lease which will be prepared by the Solicitor to Government Law &
Judiciary Department, at the entire cost of the licensee including stamp duty
and registration charges. The licensee will have to pay a deposit of Rs 300
towards the professional charges of the Solicitor to Government.
licensee will not directly or indirectly transfer, assign, encumber or part
with the interest under or the benefit of the agreement to lease of any part
thereof in any manner without the previous consent in writing of the
Government. Government will be free to refuse such consent or grant it, subject
to such conditions including a condition regarding the payment of premium as
Government may in its absolute discretion think fit.
16.The lessee will not assign or part with possession of the demised premises
or any part thereof or under let or transfer the lessee's interest therein
without the pervious consent in writing of the lessor. The lessor will' be at
liberty to refuse such consent or grant it subject to such conditions including
a condition requiring payment of premium as the lessor may in his absolute
discretion think fit." But what is necessary to notice is the draft
agreement of licence clearly stated in clause II as under :
in these presents contained shall be construed as a demise in law of the said
land hereby agreed to be demised or any part thereof so as to give to the
licensee any legal interest therein until the lease hereby contemplated shall
be executed and registered but the licensee shall only have a licence to enter
upon the said land for the purpose of performing this agreement.
this, the respondent made an offer on December 15, 1970 in the prescribed form duly stamped
along with annexures enclosing the receipt for payment of Rs 75,000 as earnest
deposit. In the questionnaire which accompanied this offer, it was stated as under
company proposes to sell the flats in the said proposed building on ownership
basis and the purchasers of such flats will form a cooperative society or an
incorporated body to whom the property and the rights of the company will be
January 1, 197 1, the Collector wrote to the
respondent as under "The Government has been pleased to accept your tender
for the lease of the above plot at the rate of Rs 2225 per sq. metre."
19.On February 23, 1971, the respondent requested the
Collector to above the Government for the issue of necessary orders for the
lease of plot. it was specifically stated in that letter as under :
would also like to inform you that at the time of making the offer for the
above plot, in the accompanying questionnaire form, we have stated that the
company proposes to construct the building on the above plot and to sell the
flats on ownership basis and the flat purchasers shall form into a cooperative
society or an incorporated body to which the rights of the company including
the rights for the lease of the above plot will be transferred. As such, the
company will be acting as the promoters or the builders for the aforesaid
scheme and the lease of the plot will be taken by us in the name of a
cooperative society or an incorporated body to be formed or constituted
these circumstances, we would request you that necessary provision for granting
lease in the name of a cooperative society or an incorporated body as
aforesaid, may please be made in the orders to be passed by the
to this letter, the Collector in his reply dated March 16, 1971 stated asunder: 504 "No. SB/CC3/LND 2832 (46) Office
of the Collector of Bombay, (Survey Branch) Old Custom House,
Fort, Bombay 1.
16.3.1971 To M/s Atur India Pvt. Ltd., Civil Engineers, 31 1, Mirabelle, 33 A,
New Marine Lines, Bombay-20.
Sub: Lease of Plot No. 46, Block V, B ackbay Reclamation.
refer to your letter dated 23.2.1971.
has sanctioned the lease of the above plot in your favour as promoters of a
cooperative housing society or an incorporated body to be formed by you, on the
ground rent calculated at 6 1/2% per annum on the value of the land at Rs 2297
per sq. metre subject to the terms and conditions detailed in the accompanying
memo whose terms and conditions have already been agreed to by you.
requesting the Asstt. Solicitor to Government L. & J. Deptt. to take inhand
the preparation of the draft agreement to lease.
faithfully, Sd/ Collector of Bombay.
forwarded with compliments to the:
Solicitor to Govt. L. & J., Deptt., with reference to G.R. & R & F Deptt.
No. LBL 2570/290652-AI, dated 3rd March, 1971, please take in hand the
preparation of the draft agreement to lease.
submitted for information to the Secretary to Govt. R & F Deptt., A-1,
Collector of Bombay."
this letter was enclosed the draft agreement to lease. On February 16, 1972,
the Collector wrote to the respondent "as you have furnished the required
undertaking on stamp paper, the possession of the above plot may be deemed to
have been handed over to you with effect from the date of this letter". On
June 21, 1972, the respondent informed the Collector that it agreed to sell the
flats in the building under construction and the purchasers would form a cooperative
society under the name of Basant Cooperative Housing Society Ltd. and that the
society is being registered shortly. On that basis, it was requested to grant
permission to transfer the 505 rights, title and interest of the respondent in favour
of Basant Cooperative Housing Society. The building was completed some time in
1974 and Bombay Municipal Corporation granted occupation certificate by a
letter dated July 30, 1974. On August 8, 1977, the Basant Cooperative Housing
society Ltd. came into being. On December 13, 1977, the following letter as
addressed to the respondent :
SB/CC3/LND-2832 (101) Collector's Office, Survey Branch, Old Custom House,
Secretary, M/s Atur India Pvt. Ltd., 31 1, Mirabelle, 33 A, New Marine Lines,
Lease of Plot No. 101, Block V B.B.R. to M/s Atur India P. Ltd., Sir, Please
refer to your letter No. AI/1 10/7-72/582 dated 21st June, 1972. Govt. has
sanctioned your request to transfer the rights, title and interest in the Plot
No. 101 from Block V, Backbay Reclamation to the Basant Cooperative Housing
faithfully, Sd/- For Collector of Bombay." Whereupon the request was made
on February 17, 1978 reiterating the demand to execute the lease in favour of
the society. It was at this stage, the Collector wrote a letter dated May 25,
1978 demanding stamp duty on the basis that there was a lease from the
Appellant Government to the respondent and onward to the society and further
demanding unearned increase @ 50% of the difference between the market value
and the price at which allotment was made. On February 24, 1983, a letter was
addressed by the Superintendent of Stamps to the respondent requiring the
respondent to pay stamp duty. The correspondence was impounded on the ground
that the agreement arrived at by the correspondence in this case amounted to
a careful examination of these documents, the following emerge
was contained in the notice dated November 30, 1970 was only an offer to lease of land
and the offer was specifically as promoter which is evident from the answer to
the questionnaire which has been extracted above.
appellant stated that it was pleased to accept the tender of the respondent for
the lease. At that time, the appellant was aware of the offer of the respondent
Right from February 23, 1971, again and again the respondent reiterated his
position as promoter.
request was made on December 7, 1977 for execution of lease in favour of the
cooperative society. That was specifically acceded to by the Collector on
December 13, 1977.
was no actual demise on the date of acceptance of the offer of tender of the
respondent. Even on February 16, 1972, it was only a case of deemed possession.
notice dated November 30, 1970 contained various clauses requiring the use of
building only for private residence and debarred from transferring or assigning
the right. Clause 15 was never enforced at any point of time. If really, that
was so, the appellant would not have agreed to the respondent's transferring
the rights, title and interest in favour of the cooperative society. Therefore,
the stand of Mr Harish N. Salve, learned counsel for respondent that clause 15
was not enforced, has to be accepted.
facts mentioned above are clearly indicative of an agreement to lease and not
an agreement of lease. The distinction between the two may be seen first with
reference to English law. Woodfall in Law of Landlord and Tenant,Vol. 1, 28th Edn.,
1978 at page 127 states as under:
contract for a lease is an agreement enforceable in law whereby one party
agrees to grant and another to take a lease. The expressions 'contract for
lease' and 'agreement for lease' is to be preferred as being more definite,
agreement frequently means one of many stipulations in a contract.
contract for a lease is to be distinguished from a lease, because a lease is
actually a conveyance of an estate in land, whereas a contract for a lease is
merely an agreement that such a conveyance shall be entered into at a future
date." (emphasis supplied) In contradistinction to this, in the case of a
lease, there must be words of demise. On this Woodfall states at page 184 as
usual words by which a lease is made are 'demise' and 'let'; but any words
which amount to a grant are sufficient to make a lease.
words are sufficient to explain the intent of the parties, that the one shall
divest himself of the possession and the other come into it, for any
determinate time, whether they run in the form of a licence, covenant or
agreement, are sufficient, and will in construction of law amount to a lease
for years as effectually as if the most proper and pertinent words had been
used for that purpose; for if the words used are sufficient to prove a lease of
land, in whatsoever form they are introduced, the law calls in the intent of
the parties, and moulds and governs the words accordingly." 507 Again at
page 185, it is stated :
no specific words are necessary to create a lease, yet there must be words used
which show an intention to demise, therefore, where, on the letting of land to
a tenant, a memorandum was drawn up, the terms of which were, that he should on
a future day bring a surety and sign the agreement, neither of which he ever
did; it was held, that the memorandum was a mere unaccepted proposal, and did
not operate as a lease. (Doe d. Bingham v. Cartwright')"
Hill & Redman in Law of Landlord and Tenant, 17th Edn., Vol. 1 at page 1 00
dealing with this aspect of the matter states as under:
BETWEEN LEASE AND AGREEMENT FOR LEASE 40.(1) A lease is a transaction which as
of itself creates a tenancy in favour of the tenant.
agreement for a lease is a transaction whereby the parties bind themselves, one
to grant and the other to accept, a lease.
the agreement for a lease is one of which specific performance will be granted
the parties are, for most but not all purposes, in the same legal position as
regards each other and as regards third parties as if the lease had been
an instrument operates as a lease or as an agreement for a lease depends on the
intention of the parties, which intention must be ascertained from all the
instrument in proper form (a); by which the conditions of a contract of letting
are finally ascertained, and which is intended to vest the right of exclusive
possession in the lessee either at once, if the term is to commence immediately,
or at a future date, if the term is to commence subsequently is a lease which
takes effect from the date fixed for the commencement of the term without the
necessity of actual entry by the lessee (b).
instrument which only binds the parties, the one to create and the other to
accept a lease thereafter, is an executory agreement for a lease, and although
the intending lessee enters, the legal relation of landlord and tenant is not
created." 26. A useful reference may be made to Green v. Bowes-Lyon2.
ruling clearly brings out the distinction between an agreement to lease and a
lease. At pp. 304-05, it is held by Pearson, J. as under:
defendant's contention is that the instrument dated March 19, 1958, that is the
instrument called a reversionary lease, is in truth an agreement between the
landlord and the tenant 'for the grant to the tenant of a future tenancy of the
holding on terms and from a date specified in the agreement' within the meaning
of Section 28. If that is right then the defendant's sub-lease from the
plaintiff was the 'current tenancy' referred to in Section 28, and it continued
only until April 5, 1 (1820)3B&Ald326 2 (1960) 1 All ER301:(1960)1 WLR 176
508 1959, and no longer, and was not, therefore, a tenancy to which Part 2 of the
Act applied. So it was not continued indefinitely under Section 24. Then on
that basis it is said that the agreement binds the interest of the plaintiff
under para 3(1) of Schedule 6 to the Act of 1954, and that para 4 of that
schedule gives the plaintiff a right to compensation.
question in the end is a very simple one : is the instrument of March 19, 1958,
a reversionary lease or is it an agreement for the grant of a future tenancy?
Having regard to its name and provisions I hold that it is a reversionary
tenancy and not an agreement for the grant of a future tenancy. It creates an
estate and not merely a set of contractual rights and obligations.
is a definition of term of years absolute in the Law of Property Act, 1925,
Section 205(1) (XXVII), as a term of years 'taking effect either in possession
or in reversion whether or not at a rent' and so on.
it is stated in Woodfall on Landlord and Tenant (25th Edn.), P. 286, that 'A
lease may be limited to take effect either immediately or from a future date.
It is provided by the Law of Property Act, 1925, Section 205(1) (XXVII), that
"term of years absolute" includes a term of years taking effect
either in possession or in reversion.' At p. 287 of Woodfall on Landlord and
Tenant (25th Edn.) it is stated :
leases : All leases which are not to take effect in possession immediately, but
from a future day, are considered as reversionary leases, within the meaning of
powers to grant leases in possession and not in reversion. In legal acceptance
a lease for years in reversion, and a future interest for years, are one and
the same : a future lease and a lease in reversion are synonymous. But strictly
speaking a reversionary lease-is one granted for a term which is to commence
from or after the expiration or other determination of a previous lease.' In my
view, this instrument is a reversionary lease which was granted for a term
which was to commence from and after the expiration of the previous lease,
which is the lease from Mr Rye to Mr Wells, expiring on April 4, 1959, and this
instrument granted is a reversionary lease commencing on April 5, 1959.
seems to me that the distinction between the reversionary lease referred to in
Section 65(3) and the agreement for a future tenancy referred to in Section 28
is the difference between something which creates an estate and something which
creates merely a set of contractual rights and obligations." 27.We will
now turn to Indian law. Mulla in The Transfer of Property Act (7th Edn.) at
page 647 dealing with agreement to lease states as under :
"An agreement to lease may effect an actual demise in which case it is a
lease. On the other hand, the agreement to lease may be a merely executory
instrument binding the parties, the one, to grant, and the other, to accept a
lease in the future. As to such an executory agreement the law in England
differs from that in India. An agreement to lease not creating a present demise
is not a lease and requires neither writing nor registration.
an executory agreement to lease, it was at one time supposed that an intending
lessee, who had taken possession under an agreement to lease capable of
specific performance, was in the same position as if the lease had been
executed and registered. These cases have, however, been rendered obsolete by
the decisions of the Privy Council that the equity in Walsh v. Lonsdale does
not apply in India." 28.If it is merely an agreement to lease as to
whether it requires registration has come up for discussion of this Court in Tiruvenibai
v. Lilabai3. At page 111 it was held as under:
dealing with these points, we must first consider what the expression 'an
agreement to lease' means under Section 2(7) of the Indian Registration Act,
hereinafter referred to as the Act. Section 2(7), provides that a lease
includes a counterpart, Kabuliyat, an undertaking to cultivate and occupy and
an agreement to lease. In Hemanta Kumari Debi v. Midnapur Zamindari Co. Ltd.4
the Privy Council has held that ,an agreement to lease, which a lease is by the
statute declared to include, must be a document which effects an actual demise
and operates as a lease'. In other words, an agreement between two parties
which entitles one of them merely to claim the execution of a lease from the other
without creating a present and immediate demise in his favour is not included
under Section 2, sub-section (7). In Hemanta Kumari Debi case4 a petition
setting out the terms of an agreement in compromise of a suit stated as one of
the terms that the plaintiff agreed that if she succeeded in another suit which
she had brought to recover certain land, other than that to which the
compromised suit related, she would grant to the defendants a lease of that
land upon specified terms. The petition was recited in full in the decree made
in the compromised suit under Section 375 of the Code of Civil Procedure, 1882.
A subsequent suit was brought for specific performance of the said agreement
and it was resisted on the ground that the agreement in question was an
agreement to lease under Section 2(7) and since it was not registered it was
inadmissible in evidence. This plea was rejected by the Privy Council on the
ground that the document did not effect an actual demise and was outside the
provisions of Section 2(7). In coming to the conclusion that the agreement to
lease under the said section must be a document which effects an actual demise
the Privy Council has expressly approved the 3 1959 Supp 2 SCR 107: AIR 1959 SC
620 4 LR (1919) 46 IA 240: AIR 1919 PC 79 510 observations made by Jenkins,
C.J., in the case of Panchanan Bose v. Chandra Charan Misra5 in regard to the
construction of Section 17 of the Act. The document with which the Privy
Council was concerned was construed by it as "an agreement that, upon the
happening of a contingent event at a date which was indeterminate and, having
regard to the slow progress of Indian litigation, might be far distant, a lease
would be granted"; and it was held that 'until the happening of that
event, it was impossible to determine whether there would be any lease or not'.
This decision makes it clear that the meaning of the expression 'an agreement
to lease' 'which, in the context where it occurs and in the statute in which it
is found, must relate to some document that creates a present and immediate
interest in the land'. Ever since this decision was pronounced by the Privy
Council the expression 'agreement to lease' has been consistently construed by
all the Indian High Courts as an agreement which creates an immediate and a
present demise in the property covered by it." 29.Examining in the light
of above, we hold that the notice of the appellant dated November 30, 1970, the
offer of the respondent dated December 15, 1970 and the acceptance of the
Collector of the tender of respondent for lease dated January 1, 1971 would
merely constitute an agreement to lease. Clause 13 clearly contemplates that
the licensee will be put in possession of plot on his executing the agreement
to lease. Therefore, it is clear that by the respondent accepting the offer on
December 15, 1970, the relationship of lessor and lessee between the appellant
and the respondent had not come to be established. Further as pointed out
earlier there was no actual demise on the date of the accepting of tender.
Therefore, it is only an agreement to lease. It will not fall under Section
2(n) of the Act in which case, it is not an instrument chargeable to duty and
the question of impounding does not arise. Much less, there could be a demand
for stamp duty.
is the benefit of this agreement which is sought to be assigned in favour of Basant
Cooperative Housing Society.
narration of facts, we have pointed out as to how from the beginning i.e. from
December 15, 1970 onwards, when the offer was made by the respondent in answer
to a questionnaire, it was made clear that the offer was made as a promoter.
This position was again affirmed on February 23, 1971 which was accepted by
Collector on March 16, 1971.
letter from the Collector dated December 13, 1977 puts the matter beyond doubt
because the respondent's request to transfer the rights, title and interest in
Plot No. 101, in favour of Basant Cooperative Housing Society was sanctioned.
law, the benefit of such a contract can be assigned. That is precisely what the
respondent did in the instant case.