S.N. Mathur Vs. Board
of Revenue/C.C.R.A. & Ors. [2009] INSC 364 (18 February 2009)
Judgment
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 4916 OF 2002 S N Mathur
....... Appellant Board of Revenue & Ors. .......
Respondents
R.V.RAVEENDRAN, J.
1.
This
appeal relates to the stamp duty payable in regard to a deed of trust dated
9.8.1991 executed by the appellant and his two brothers. The executants paid a
stamp duty of Rs. 1,325/ thereon, under Article 64 of Schedule I-B to the
Indian Stamp Act, 1899 as amended in U.P. (`Act' for short). The registering
authority being of the view that it was not duly stamped, impounded it and
referred it to the adjudicating authority. The said Authority made an order
that the deed also answered the definition of 2 "settlement" as
defined under section 2(24) of the Act, and therefore stamp duty was payable
under Article 58 of Schedule I-B of the Act on the declared value of the trust
property (Rs.2,10,000/-). He directed recovery of deficit stamp duty of
Rs.10,225/- and an equal amount as penalty. The said order was challenged by
the appellant by filing a revision before the Chief Controller (Board of
Revenue), Allahahad. The revisional authority dismissed the revision by order
dated 21.5.1996. The appellant challenged the said order in Writ Petition No.54
of 2002. The High Court dismissed the writ petition holding that the authority
under the Stamp Act did not commit any error in construing the instrument to be
a "settlement" as defined under section 2(24) of the Act and that
stamp duty was payable under Article 58. The said order is challenged in this
appeal.
2.
The
title part of the instrument reads thus : "This deed of Private Trust is
made on 9.8.1991 by (names of three Donor Trustees) in order to preserve,
protect and manage the property known as `Mathur Atithi Shala' situated at
Chitrakoot, on the following terms and conditions :" The preamble to the
instrument recites that the said property was the self-acquired property of
their father and he had constructed the Atithi Shala therein for housing the
pilgrims, and the said property is being used for the said purpose ever since
3 then; that they (the three donor Trustees) had inherited the said property
from their father and they possess and own the said `Mathur Atithi Shala' and
have full disposing power; that as they were no longer able to manage the
property, they decided to form a private trust consisting of the member of the
family to look after the said property and have accordingly created the said
trust to be known as `Shri Jamuna Janki Mathur Trust' for the due preservation,
protection and management of the said property. The operative portion of the
said deed states :
"The Donor
Trustees in pursuance of their wish and desire as aforesaid do hereby grant,
convey and transfer all that property i.e. `Mathur Atithishala' described in
the Schedule hereto, unto and to the use of the Trustees to HAVE AND TO HOLD
the same in trust for the said donor trustees subject to such powers and
limitations as are hereinafter specified. It is made clear that the Trust shall
own, possess and manage the Trust Property once and for all."
The deed thereafter
proceeded to set down the objects of the Trust which are charitable and
religious in nature. It also constituted a Board of Trustees consisting of the
three donors and two other family members and an Executive Committee consisting
of ten members. It also provided the eligibility criteria for being appointed
as a trustee, the term of office of the trustees, the circumstances in which
the trustees will cease to hold the office and the powers and duties of the
trustees.
3.
The
appellant submitted that the terms of the instrument clearly make out that it
was a deed of trust and not a deed of settlement. Reliance is placed on three
Full Bench decisions, namely, Narendra Singh Ju Deo v. Junior Secretary, Board
of Revenue [AIR 1947 Allahabad 141] The Chief Controlling Revenue Authority,
Board of Revenue v. T Ranganathan Pillai [AIR 1981 Mad. 193] and Sardar Deorao
Jadhav v. State of Madhya Pradesh [AIR 1991 MP 247].
4.
On
the other hand, learned counsel for the State and the authorities under the
Stamp Act (respondents 1 to 4) submitted that the instrument in question came
within two descriptions in Schedule I-B to the Act that is "Deed of
Settlement" chargeable under Article 58 and "Deed of Trust"
chargeable under
Article 64; that where an instrument comes within more than one description in
Schedule I-B, and the duties chargeable thereunder are different, the
instrument should be charged with the highest of such duties; and that as the
stamp duty under Article 58 was higher than the stamp duty payable under
Article 64, the instrument was chargeable with the stamp duty provided under
Article 58. In support of his contention that the instrument also came within
the definition of "settlement" as defined under section 2(24) of the
Act, he relied upon two full Bench judgments of Allahabad and Delhi High Courts
in Board of Revenue, U.P. v. Sridhar, 5 Advocate [AIR 1964 All. 537] and The
Chief Controlling Revenue Authority v. Banarsi Dass Ahluwalia [AIR 1972 Delhi
128].
5.
The
question for consideration is not whether the instrument is a deed of trust or
not. The fact that the instrument falls within the description of Trust deed is
not in doubt. In fact that is not challenged by the State. The question is
whether the instrument answers the definition of `settlement' and therefore
would also come under the description of `settlement deed' in Article 58. The
appellant contends that it will not, and for that purpose relies on the
recitals of the trust deed that the Trust is created for preserving, protecting
and managing the trust property known as `Mathur Atithishala' in Chitrakoot.
The state contends that it will, and for that purpose relies on the operative
portion of the instrument which shows that the three owners conveyed and
transferred their property to the Trustees, to have and to hold the same and to
own, possess and manage it as Trust Property. On the contentions raised, the
question that arises for consideration is whether the instrument in question
which answers the description of `Trust deed', will also answer the description
of "settlement deed", and if so whether stamp duty is payable on the
instrument, under Article 58 of Schedule I-B to the Act.
6.
Reference
to the relevant provisions of the Indian Stamp Act, 1899 (as amended in Uttar
Pradesh) will be necessary to answer the question raised.
Section 2(24) of the
Act defines settlement thus :
"settlement"
means any non-testamentary disposition, in writing, of moveable or immoveable
property made- (a) in consideration of marriage, (b) for the purpose of
distributing property of the settler among his family or those for whom he
desires to provide, or for the purpose of providing for some person dependent
on him, or (c) for any religious or charitable purpose;
and includes an
agreement in writing to make such a disposition and, where any such disposition
has not been made in writing, any instrument recording, whether by way of
declaration of trust or otherwise, the terms of any such disposition;"
Section 3 provides
that subject to the provisions of the Act and the exemptions contained in
Schedule I, every instrument mentioned in the Schedule to the Act shall be
chargeable with duty of the amount indicated in that Schedule as the proper
duty therefor. Section 6 provides that subject to the provisions of section 5,
an instrument so framed as to come within two or more of the descriptions in Schedule
I, (or Schedule IA or IB, as the case may be) shall, where the duties
chargeable thereunder are different, be chargeable only with the highest of
such duties. Schedule IB (as amended in Uttar 7 Pradesh) enumerates the stamp
duty on instruments under the Act in its application to Uttar Pradesh. Relevant
portions of Articles 58 and 64 of the said schedule are extracted below :
Description of
Instrument Property Stamp Duty "58. SETTLEMENT The same duty as a Bond
(No.15) for a sum equal to the amount or value of the property --A.--Instrument
of (including a deed of settled dower).
"64. TRUST--
A.--DECLARATION OF -- of or concerning, any property when made by any writing
not being a Will.
(a) where the amount
of value does not The same duty as on a Bond (No.15).
exceed Rs.10,000;
(b) where such amount
exceeds Rupees On ten thousand rupees the duty payable 10,000; under clause (a)
and on the remainder, Three rupees for every additional one thousand rupees or
part thereof."
7.
The
principles relating to charging stamp duty are well settled. They are:
(i) The object of the
Stamp Act is generation of revenue. It is therefore a fiscal enactment and has
to be interpreted accordingly.
(ii) Stamp duty is
levied with reference to the instrument and not in regard to the transaction,
unless otherwise specifically provided in the Act.
(iii) Stamp duty is
determined with reference to the substance of the transaction as embodied in
the instrument and not with reference to the title, caption or nomenclature of
the instrument.
(iv) For
classification of an instrument, that is to determine whether an instrument
comes within a particular description in an article in the Schedule to the Act,
the instrument should be read and construed as whole.
(v) Where an
instrument falls under two or more descriptions in the Schedule to the Act, the
instrument shall be chargeable with only one duty, that is the highest of the
duties applicable to the different description. But where an instrument relates
to several distinct matters, it shall be chargeable with the aggregate amount
of duties to which separate instruments would be chargeable.
Merely because an
instrument answers the definition of a trust deed it does not cease to be a
settlement deed for the purpose of stamp duty, if it answers the definition of
`settlement' also. It is well settled that all trusts are not settlements, and
all settlements are not trusts, but a deed of trust can also be a deed of
settlement.
8.
It
is evident from the definition of "settlement" in section 2(24) that
any non-testamentary disposition in writing, either of moveable or immovable
property made for any religious or charitable purpose is a settlement. The
definition also makes it clear that even where there is no such disposition in
writing, any instrument recording whether by way of declaration of trust or 9
otherwise, the terms of any of such disposition will also be a settlement. It
is thus evident that not only instruments which are non-testamentary dispositions
of property for any religious or charitable purpose, but also declarations of
trust which record the terms of such disposition, are settlements.
`Disposition' is a term of wide import which encompasses any devise or mode by
which property can pass and includes giving away or giving up by a person of
something which was his own (see : The Commissioner of Gift Tax Madras vs. N.S.
Getty Chettiar - AIR 1971 SC 240 and The Collector of Estate Duty Andhra
Pradesh vs. Kancharla Kesava Rao - AIR 1973 SC 2485). This Court has also held
that the word "disposition"
refers to a bilateral
or multilateral act of transfer and will not apply to a unilateral act as, for
example, when a person treats his individual property as a joint family
property. (See : Goli Eswariah vs. Commissioner of Gift Tax - AIR 1970 SC
1722). Black's Law Dictionary defines "disposition" as the act of
transferring something to the care or possession of another; or relinquishment
or giving up of property". In this case, the instrument is not termed as a
"Settlement". It is clearly a declaration of trust and is described
as a `deed of Trust'. But it records the terms of disposition of an immovable
property for religious and charitable purposes. The operative portion of the
instrument clearly recites that the three donors/Founders grant, convey and 10
transfer their property `Mathur Atithishala' unto the trustees (that is the
three founders and two others) and also declares that the Trust shall own,
possess and manage the same as the absolute owner. The three executants of the
Trust deed divested themselves of ownership of the property which was
transferred to the Trust represented by five trustees. Thus there was a
disposition for religious and charitable purposes. It is thus clear that the
instrument answers the definition of "settlement" under section 2(24)
of the Act. As the stamp duty leviable under a deed of settlement under Article
58 is more than the stamp duty leviable in regard to a deed of trust under
Article 64, the authorities under the Stamp Act have rightly held that the
instrument is chargeable with the higher duty prescribed under Article 58
applicable to a settlement.
9.
We
will now examine whether the three decisions relied on by the appellant is of
any assistance.
9.1 In Narendra Singh
Ju Deo (supra), the Chief Controlling Revenue Authority made a reference to the
High Court under section 57 of the Act, expressing the opinion that the
instrument was a trust and not a settlement, but had some doubt about it. A
Full Bench of the Allahabad High Court held that the instrument was not a
settlement in view of the following circumstances: (a) Though the owner of the
property transferred the property to three trustees who were to manage the
property on his behalf during his life-time and to make certain arrangements in
the event of his death, there was nothing to show that the deed could be
regarded as one executed for the purpose of distribution of owner's property.
(b) The owner of the property had reserved a right of revocation of the trust
to himself and it seemed that the general intention of the owner was that the
property should remain in the hands of the trustees for sometime and that they
should deal with it in the manner in which he would have dealt with it, if he
had not created a deed of trust. The said decision was not supported by any
reasoning or principle. In fact, the said decision was not accepted by a larger
Bench of that High Court in Board of Revenue, UP vs. Sridhar (supra), wherein a
Special Bench of five Judges examined whether a draft deed in respect of which
a reference was made under section 57 of the Act, was a declaration of trust or
settlement.
They examined the
terms of the deed and found that there was a disposition of property. The Court
held :
"This definition
of the word "Settlement" itself makes it clear that even instruments
which are executed containing a declaration of trust can be settlements
provided the conditions laid down in the earlier part of the definition are
satisfied. The question in these circumstances that falls for own opinion is
whether this particular instrument, to which this instrument relates, is a
"settlement" or not, even though it may on the face of it, be a deed
of Trust".
We respectfully agree
with the said observations. Referring to the earlier decision in Narendra Singh
Ju Deo, the Special Bench held that the reasons given therein to hold that the
disposition did not amount to a settlement were not sufficient to take the
instrument out of the category of a `settlement' as defined under section
2(24). It was held that the instrument would be a settlement, even if the
disposition was not for the purpose of distribution of the owner's property if
the disposition was for the purpose of providing for some persons depending on the
settler. It was also observed that the reservation of the right of revocation
had no bearing on the question whether a deed of trust amounted to a settlement
or not. The Bench concluded that deed of trust as also a deed of settlement,
can be for a limited period.
9.2) In T.
Ranganathan Pillai (supra), a Full Bench of the Madras High Court was dealing
with a reference in respect of a deed purporting to be a Trust deed under which
a Trust was created by the founder of the Trust in respect of his properties
for the benefit of his family and himself. During the arguments, it was
conceded on behalf of the State that the deed did not fall within the
definition of `Settlement' either under clauses (a) and (c) of section 2(24).
The High Court also noted that ultimately the learned counsel for the State
conceded that even clause (b) of section 2(24) did not apply.
Consequently the High
Court held that it was not a deed of settlement but 13 only a declaration of
Trust. The High Court on an examination of the terms of the instrument, also
held that it was not made for any of the three purposes mentioned in clauses
(a), (b) and (c) of Section 2(24), and therefore, it was not a settlement. The
said decision is therefore of no assistance.
9.3) In Sardar Deohao
Jadhav (supra), the MP High Court was considering the question whether the
instrument before it was a trust deed or a settlement deed. In that case the
properties had already been dedicated to the family deities by the forefathers
of the executant of the trust deed and the executant was only having custody of
the properties which was in the ownership of the deities. By the deed of trust,
the executant merely purported to make proper provision in respect of the
discharge of duties of his office of Shebait of the family deities and declared
a trust in respect of the properties mentioned therein. There was no
disposition, but merely a declaration or assertion that the properties belonged
to the deities. In those circumstances, the High Court found, reading the deed as
a whole, that the executant was executing a trust deed in respect of the
properties of family deities of which he was the Shebait and the essence of the
document was to provide for the custody of the properties, and not to make any
`disposition'. By executing the deed of trust, the executant neither
transferred nor parted with any property. He `lost' nothing by executing the
deed. The High Court therefore held that the instrument was liable to be
stamped under Article 64, as a Trust deed. The decision, on the facts, is
inapplicable.
9.4) Neither of the
three decisions relied on by Appellant is therefore of any assistance. In
Banarsi Dass Ahluwalia (supra), relied on by the respondents, a Special Bench
of the Delhi High Court was considering an instrument whereby the founder
created a public charitable trust and appointed himself as the first trustee
and dedicated and endowed upon trust his various assets and properties and
declared that the business and properties described there under, shall no
longer be the personal business and properties of the founder but shall be held
in Trust. The Delhi High Court held that the term `settlement' had a larger
ambit than `trust' having regard to the definition of settlement in section
2(24). It also held that while a trust made for the purposes specified in
section 2(24) would always be a settlement; the converse may not be true. The
Court therefore held that the deed of trust also answered the definition of
`settlement' and having regard to section 6, when an instrument is covered by
both Articles 64 and 58 of the Act, it shall be chargeable to duty under
Article 58 as the duty there under was higher than the duty under Article 64.
This decision reiterates the principle enunciated by the Allahabad High Court
in Sridhar (supra). Be that as it may.
10.
We
therefore uphold the decision to subject the deed to stamp duty under Article
58 of the Act. We are however of the view that the case does not warrant levy
of penalty equal to the deficit stamp duty. On the facts and circumstances, we
reduce the penalty to Rs.5/-. The appeal is allowed in part accordingly.
__________________J
[R. V. Raveendran]
_________________J
[J M Panchal]
New
Delhi;
February
18, 2009.
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