1. The Commissioner of Survey, Settlements and Land Records, Hyderabad in his capacity as Chief Controlling Authority made this reference under S. 57(1), Stamp Act, 11 of 1899. The reference is in the following terms. Whether the document in question styled as lease-cum-sale agreement is chargeable with stamp duty under Art. 31 (a) (iv) and Art. 31 (c) of Sch. 1-A, Stamp Act, or the document has to be classified as an agreement chargeable with stamp duty of Rs. 5/- as contended by the petitioner.
2. The facts leading to the reference are simple. The document Dt/- 27-7-1974 was executed by the petitioner in connection with the allotment of a house by the Andhra Pradesh Housing Board under hire purchase system. During the course of the audit of the office of the Andhra Pradesh Housing Board, the document in question was noticed and the same was reported to the Inspector General and the said Officer in his order D/- 22-10-1979 treating the document as one chargeable with stamp duty under Arts. 31 (a) (iv) and 31 (c) of Schedule 1-A, Stamp Act, 2 of 1899, directed that the deficit stamp duty of Rs. 495/- and a penalty of Rs. 50/- shall be paid. Against the said order the revision petition was filed before the referring authority and the referring authority considering the question as one of importance made the reference accordingly as above stated.
3. The two articles relevant for the question are Arts. 5 and 35 and Sch. I (Central Act) corresponding to Arts 6 and 31 (a) (iv) and 31 (c) of Sch. 1-A of the State Act. The sole question for determination is whether the instrument in question is an agreement (hire-purchase agreement) or a lease. It is necessary to refer to the definition of instrument and also lease given in S. 2 (14) and (16) which are in the following terms :-
'S. 2 (14). 'Instrument' includes every document by which any right or liability is, or purports to be created, transferred, limited, extended, extinguished or recorded.'
'S. 2 (16). 'Lease' means a lease of immoveable property and includes also.
(a) a patta;
(b) a kabuliyat or other undertaking in writing, not being a counter-part of lease, to cultivate, occupy or pay or deliver rent for immoveable property;
(c) any instrument by which tolls of any description are let;
(d) any writing on an application for a lease intended to signify that the application is granted.'
4. Section 3 is the charging section and it is clear that the levy of the duty is on the instrument but not on the transaction. However in order to determine the nature of instrument the Court has to look into the nature of the transaction covered by the instrument.
5. It is seen that S. 2(16) without defining the 'lease' merely says that a lease is a lease plus something else. But however under the definition it must be moveable property. The lease of moveable property is not governed by the Act. It is necessary to look to the definition of lease under S. 105, T. P. Act, which is in the following terms.
'A lease of immoveable 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, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.
'The Transfer is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.'
Section 107 T. P. Act gives the mode of creating a lease. A lease of immoveable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument, and the deed must be signed by both lessor and the lessee. No doubt S. 2(7), Registration Act, 16 of 1908, which is a cognate provision while defining lease includes in its fold agreement to lease also. An agreement to lease is not a lease for purpose of Transfer of Property Act or the Stamp Act. The essential requirement of a lease under S. 105 T. P. Act, is there must be present demise or a partial transfer of immovable property for a certain term of a period specified or in perpetuity. If the document in question is construed as lease deed it is inoperative for want of registration and it can be deemed to be a monthly lease terminable by fifteen days notice. It is true we are not concerned with the consequence of the transaction. However confining to the construction of the instrument we are of the opinion that it is not a lease but only an agreement to hire.
6. In this connection it is necessary to refer to Andhra Pradesh Housing Board (Allotment on Lease-cum-Sale of Tenement & Premises) Regulation 1973. The said Regulation was framed in exercise of the power under S. 71 (b) of the Andhra Pradesh Housing Board Act 46 of 1956. The Regulation defines under Regn. 4 (b) 'Allottee' means the person to whom a tenement and premises is allotted under these regulations and includes his nominee or legal heir established by a certificate issued by the Administrator-General of Andhra Pradesh or by a Civil Court. The 'Allotment' means allotment of a house on lease-cum-sale basis under these regulations (Vide Reg. 4 (c)). Under R. 9, 'Within thirty days from the date of receipt of the order of allotment the allottee shall pay an initial deposit equal to one-fifth of the cost price of the house along with the rent if any due.' Regulations 10 is crucial which states 'Within six weeks from the date of receipt of order of allotment of the house on hire purchase basis the allottee shall execute and register at his own cost a lease-cum-sale agreement with the Board in Form. No. 11.' The deed in question is executed in pursuance of this Regulation.
Regulation 13 says 'The sale price of the houses should be their present market value (including land) less normal depreciation, and not their original cost of construction' and gives its component parts. The prescribed form under Condition 6 says 'The lessor shall not be responsible for any defects, structural or otherwise in the property and the lessee shall be bound to purchase the property notwithstanding defects if any in construction without any claim for compensation from the lessor.' . Condition 11 further states that the lessee shall pay penal interest. Thus, it is seen that though the word 'rent' is used it is only by was of arrangement, the agreed price is being taken by way of instalments. The deed does not create present demise. The terms disclose in particular Regn. 10 that the allottee took the house on hire purchase basis and till the title is transferred he has to pay what was described in the deed as rent. By fiction of law as per Regn. 5, the houses allotted under these Regulations shall be deemed to have been leased to the allottee until the lease is terminated or the house is conveyed in the name of the allottee in accordance with these regulations. It is seen for the purposes of the Act allottee was deemed to be a tenant till title is conveyed but the instrument would not factually create any present demise in order to constitute the allottee as a tenant and the Board as a landlord to be governed by the jural relationship of landlord and tenant general law. Even for the purpose of evicting the allottee a separate special procedure is provided without leaving the rights to be worked out under general law treating the allottee as tenant. Hence we are of the opinion that it is an agreement to hire the building till the property is conveyed to the allottee. It is not seriously disputed in our opinion very rightly, that if the document is an agreement to hire it is governed by Art. 6 of Schedule 1-A corresponding to Art. 5 of Schedule 1 of Central Act. (Vide Linotype and Machinery Ltd. And The Windsor Press of Calcutta, In Re) ILR 44 Cal 72 : (AIR 197 Cal 71). We are in agreement with the view expressed in the above judgment. Hence, we hold that the instrument in question is governed by Art. 6 of Sch. 1-A and Art. 31 (a) (iv) or 31 (c) of Sch. 1-A is not attracted to the facts of the case. We answer the reference accordingly. We make no order as to costs. Advocate's fee Rs. 500/-.
7. Reference answered accordingly.