Report No. 67
4.31. Section 2(10)-"Conveyance".- Section 2(10) defines a "conveyance" as follows:-
"(10) 'Conveyance' includes a conveyance on sale and every instrument by which property whether movable or immovable is transferred inter vivos, and which is not otherwise specifically provided for by Schedule 1." The broad divisions of this inclusive definition are two:-
(a) Conveyance on sale; and
(b) Other instruments.
A "conveyance on sale" is not defined in the Act. A conveyance on sale is defined1 in England as including2 "(1) every instrument, and every decree or order of any court or of any commissioners, (2) whereby any property, or any estate or interest in any property (3) on the sale thereof (4) is transferred to or vested in a purchaser or any other person on his behalf or by his direction."
1. Stamp Act, 1891, section 54.
2. The numerals in brackets are not found in the English Act, but are added here for convenience.
Conveyances on sale present no problems. As regards "other instruments", three points must be noted:
(i) There must be transfer (inter vivos);
(ii) All property is covered-movable or immovable;
(iii) But an instrument otherwise specifically provided for, is not a conveyance.
As regards the first requirement, it is to be noted that it is immaterial whether the transfer is for or without consideration except that gifts are specifically covered separately. Nor are the circumstances of transfer of any consequence. For example, a transfer on amalgamation of companies, would be covered1.
1. There is, however, executive remission for transfer of assets on amalgamation etc.
4.33. As regards the second requirement, what is to be noted is that transfer of any "property" is covered. The property may be-
(a) a debt1,
(b) good-will2, which has been described by Lord McNaghten as the benefit and good advantage of the name, reputation and connection of a business, and "the attractive force which brings in custom3;
(c) trade mark4;
(e) benefit of a contract6;
(f) a share in a company7;
(Goods can be transferred by delivery. But, if the transfer takes the form of an instrument, duty is payable).
Thus, under the present Act, all transfers of property movable or immovable on sale or otherwise and not otherwise specially provided for by the schedule, are chargeable as "conveyances". The transfers otherwise provided for in the Schedule are-
Agreement relating to deposit of title deeds etc. (Art. No. 6);
Composition Deed (No. 22);
Equitable Mortgage (No. 30);
Exchange of property (No. 31);
Gift (No. 33);
Lease (No. 35);
Mortgage deed (No. 40);
Mortgage of Crop (Art. 41);
Partition8 (Article 45);
Reconveyance (No. 54);
Release (No. 55);
Settlement (No. 58);
Transfer of share etc. (No. 62);
Transfer of lease (No. 63);
(Declaration of) Trust (No. 64).
1. As to assignment of debts, see-Doraiszvaini Mudaliar, AIR 1925 Mad 753 (Ramesam, J.)
2. Reference under the Stamp Act, 1896 ILB 23 Cal 283.
3. I.R.C. v. Muller, 1901 AC 217: (1900-1903) All ER Rep 413.
4. Benjamin Brooke & Co. v. I.R.C., (1896) 2 QB 356 (359) (CA).
5. Smelting Co. of Australia, (1897) 1 QB 175 (180, 181) (CA).
6. Nathu v. Hansraj, (1907) 9 Born LR 119 (121) (Russell J.)
7. Coats v. I.R.C., (1897) 2 QB 423.
8. On one view, partition is a transfer; on another view, it is not: See cases under sections 10, 53 etc. Transfer of Property Act.
Duty on a conveyance is subject to the exemption under Article 23. In determining the stamp duty, the substance of the transaction, as disclosed by the whole of the instrument, has to be looked into, and not merely the operative part of the instrument1-2. The use of any particular words like "release3", "relinquish", "assign" or "transfer" in any instrument does not conclusively determine the nature of the instrument.
1. Balkrishna Bihari v. Board of Revenue, AIR 1970 MP 74 (FB).
2. Venkatachalapathi v. State of Mysore, AIR 1966 Mys 323 (FB).
3. As to release, see infra.
4.35. Conveyance or release.-
The question whether a document is a conveyance or a release often proves a difficult one to decide. This is so when the transferee has already a share, or a semblance of a share, in the property in which a share is transferred. The duty on a deed of release is lower than that on a conveyance for the same amount1. A few cases will illustrate the difficulty. In a Bombay case2, the executant of the document, purporting to be entitled to a share in a going pressing factory, transferred absolutely the whole of that share to the other person interested in the factory, in consideration of a certain sum. It was held that the document was a conveyance on sale of property.
In a Mysore case,3by mutual agreement, one partner retired from business, and he executed a document whereby he gave up his share in favour of the other partner, in consideration of a certain sum of money. It was held that the deed could be classified as a conveyance, and hence it was unnecessary to consider whether the deed might also be regarded as a release. This Mysore case dissented from an earlier Madras Full Bench case,4 which itself had sought to distinguish the Bombay case5. The Madras case held that a document by which one co-owner purports to abandon or relinquish his claim to the share to which he would be entitled, is in the nature of a release. The Court had remarked that a document under which one Hindu co-parcener purported to give up right in the family property in favour of the remaining co-parceners would not be a deed of conveyance, but a deed of release. On this point, the Mysore High Court observed6:
"I am unable to see any material distinction between the share of a co-owner in a particular immovable property and a co-owner's rights and interests in the assets of the partnership, for the purpose of determining whether the instrument is a conveyance or release. Nor have their Lordships (i.e. the Madras High Court) stated why the extinguishment of the interest of the releasing co-owner and the enlargement of the interest of the release co-owner, cannot amount to a conveyance of the undivided interest of the former to the latter."
1. Article 55.
2. Hiralal Navalram (in re:), 1908 ILR 32 Born 505 (FB).
3. Venkatachalapathi v. State of Mysore, AIR 1966 Mys 323 (FB).
4. Board of Revenue v. Murugesa Mudaliar, AIR 1955 Mad 641.
5. Hiralal Navatram (in re:), 1908 ILR 30 Born 505.
6. Venkatachalapathi v. State of Mysore, AIR 1966 Mys 323 (330).
In a Mysore case of 19701, it was observed:
"Whatever may be the name given to a document by the parties, the document will have to be examined in the light of the language employed in it and the objects sought to be achieved before any decision in regard to its effect can be arrived at. It is no doubt true that in ordinary circumstances or in a majority of cases, a release deed is executed by one or more co-shares of a property in favour of the remaining co-sharer or co-sharers whereby the first-named release their interest of the second-named2. But, as pointed out by the Supreme Court3, although a deed described as a release deed can be usefully employed as a form of conveyance by a person having some right or interest to another having a limited estate e.g. by a remainder-man to a tenant for life, and the release then operates as an enlargement of a limited estate, it can also be made by using words of sufficient amplitude to transfer title to one having no title before the transfer."
In the Mysore case, the brothers who were members of a joint Hindu family transferred their interest in the joint family property to their father, but without consideration. This was interpreted by their Lordships as a gift, as the intention of the parties was to effect a transfer of title (and not a release).
1. Rajanna v. Dhondusa, AIR 1970 Mys 270 (276) (Pal, J.).
2. Nanjunda Setty v. State of Mysore, AIR 1964 Mys 124; Board of Revenue v. Murugesa Mudaliar, AIR 1955 Mad 641.
3. Kuppuszvami v. Arumugam, AIR 1967 SC 1395 (1397), para. 6.
A recent Madras case1 shows that this conflict between the two High Courts still seems to persist. The facts were as follows: By a deed dated 15th June, 1959, the mother gave up her life interest in property in favour of her son and grandson, and in lieu thereof it was provided that she would be paid a monthly amount which was charged on some other property. The deed was described as a "partition-deed", and was stamped as such. On a reference to the High Court by the Revenue authority raising the question whether it was not a conveyance, it was held that the document, in so far as the mother gave up her life-interest, was not a conveyance, but operated only as a "release deed".
The fact that such a release was for consideration made no difference in its character as such. The Court reviewed its earlier cases, and observed:-
"The essential difference between a conveyance and a release lies in the fact that in the latter, there is no transfer of an interest or right to another who had no pre-existing right in it to any extent. A release of a right or of a claim can only be in favour of a person who had a pre-existing right or claim and by reason of the release the latter's right of claim is enlarged or is made fuller in its content."
1. Board of Revenue v. Lakshmanan, AIR 1970 Mad 348 (349), para. 3 (FB).
4.37. This view of the Madras High Court is in direct conflict with that of the Mysore High Court in the case already referred to1, where it was held that where the release is by a co-owner of his share in the common property which is legally capable of being transferred in favour of another co-owner, in a consideration of a sum of money coming from outside the common property, the transaction amounts to a sale of the undivided share.
It may also be pointed out that the decision of the Supreme Court2 itself does not support the statement made by the Madras High Court in the 1970 case referred to above. The Supreme Court refused to hold "that a deed styled a deed of release cannot in law, transfer to one who before the transfer had no interest in the property". On the facts of the case, therefore, it was held that though the deed was called a release deed, the words used were sufficiently clear to transfer title to one having no title before the transfer. There was no question of stamp duty in the Supreme Court case.
1. Venkatachalapathi v. State, AIR 1966 Mys 323 (327) supra.
2. Kuppuswami v. Arumugam, AIR 1967 SC 1395 (1397): (1967) 1 SCR 275. 3:
4.38. Madras case of 1955.-
The Madras case1 of 1955 was a case of one of the co-owners releasing his right in favour of the rest of the co-owners. The High Court held that the document relating to it was a release, and not a conveyance. In expressing that view, Rajamannar, C.J., who spoke for the Court, observed:-
"In such a case there need be no conveyance as such by one of the co-owners in favour of the other co-owners. Each co-owner in theory is entitled to enjoy the entire property in part and in whole. It is not, therefore, necessary for one of the co-owners to convey his interest to the other co-owner. It is sufficient if he releases his interest. The result of such release would be the enlargement of the share of the other-co-owner. There can be no release by one person in favour of another, who is not already entitled to the property as a co-owner."
The Madras case2 of 1968 took a similar view. Both these cases related to release of a co-owner's right in favour of the rest of the co-owners.
1. Board of Revenue v. Murugesa Mudaliar, AIR 1955 Mad 641 (FB).
2. Chief Controlling Authority v. Patel, AIR 1968 Mad 159.
4.39. Scope of the words "and which is not otherwise specifically provided for by Schedule I.".-
So much as to release. Some difficulty is created also by the words "and which is not otherwise specifically provided for by Schedule I." Do these words qualify also the first category indicated by the words "conveyance on sale", or are they confined to the second category indicated by the words "every instrument by which property is transferred" etc.?
In the Mysore case, the latter view was taken. As a matter of interpretation, it is possible to take a different view and to regard the words "conveyance on sale" as unqualified by the words "and which is not otherwise specifically provided for". In fact, none of the other articles which tax a transfer of property would, in ordinary parlance, be described as a "conveyance, on sale". So this question should be academic. But it is better to make it clear that only the latter half of the clause is qualified by the words "and not otherwise specifically provided for etc."
4.40. History of the words does not throw much light on this point. In a Calcutta case1, where the Maharajah of Darbhanga, by a deed of family arrangement, conveyed a Pargana and a sum of two and a half lakhs of rupees to his younger brother on condition that the latter should release certain family properties on which he had claims, the High Court held that the deed was neither a conveyance nor a settlement nor an instrument of partition within the meaning of the Stamp Act of 1879. The deed, not having been made by way of sale, was in its nature a deed of arrangement, by which a sum of money was paid absolutely and a maintenance grant made by the Maharajah of Darbhanga to his younger brother, by way of discharge and satisfaction of all claims by way of maintenance or otherwise. It was considered that such documents should not thus escape the duty altogether, and hence the definition in the present Act has been altered so as to make it include all transfers inter vivos which were not specifically provided for in the Schedule2. The Select Committee on the Stamp Bill, 1898, observed thus:
"We have altered this definition so as to make it include all conveyance inter vivos which are not specifically provided for in Schedule I and thus to meet the difficulty in ILR 7 Cal 21, where it was held that the instrument in question was neither a 'conveyance' nor a 'settlement', nor an 'instrument of partition' but an 'arrangement' for the transfer of property."
1. Maharajah of Darbhanga (in re:), 1880 ILR 7 Cal 21.
2. In England, also prior to the passing of the Finance Act, 1910, section 74, making chargeable all transfers inter vivos, it was held in Denn dem Manifold v. Diamon, 4 B&C 243: 6 T&R 328, that a conveyance by father to son in consideration of natural love and affection and the bond of the son to augment his sister's portions by £ 1,500, was a deed of family arrangement and not a conveyance on sale; see also Massey v. Nanney, 3 Bing NC 478.