R.B. Misra, J.
1. This is a reference under Section 57 of the Stamp Act by the Board of Revenue, U. P., as the Chief Controlling Revenue Authority and arises in the following circumstances,
2. There is a bridge over river Krishna known as Rajpur Chajpur Bridge in the Rajpur Chajpur Tehsil Budhana District Muzaffarnagar within the local limits of Zila Parishad, Muzaffarnagar. The said parishad charges toll from the vehicles crossing the bridge on the said river. The Zila Parishad, Muzaffarnagar, leases out the right to collect tolls from the members of the public and the conveyances etc. passing over that bridge. An auction was conducted by the Zila Parishad, Muzaffarnagar, for leasing out the right to recover toll from the vehicles crossing the said bridge on 26th of June, 1963. Gajey Pal Singh and Tribhuwan Kumar jointly were the highest bidders and their bid was accepted by the Zila Parishad for Rs. 93,000/- for three years at the rate of Rs. 31,000/- per year to be paid to the Zila Parishad. On 30th of June, a formal deed of agreement was executed between the highest bidder and the Zila Parishad detailing out the rights to carry out the Theka and the mode of payment. The deed of agreement has been filed as annexure to the reference. Clause 1 provided thai the lease was for a period of three years and would end on 30th of September, 1976. Clause 2 stipulated that an advance sum of Rs. 7,750/-was to be paid to the Zila Parishad by the highest bidders which was to be adjusted towards full and final payment by the highest bidders at the time of the payment of the last instalment, due to the Zila Parishad.
3. The stamp clerk was of the opinion that the instrument was governed by the provisions of Article 35 (b) of Schedule 1 of the Indian Stamp Act and accordingly levied a duty chargeable at the rate of Rs. 45/- per thousand (the total duty working out at Rs. 4,185/-). On the basis of the report of the Stamp clerk, the Stamp Officer determined the Stamp Duty payable on the said instrument at Rupees 4,185/-. The document was presented for adjudication before the Collector, Muzaffarnagar under Section 31 of the Stamp Act. The Collector did not think it necessary to refer the matter to the Chief Controlling Revenue Authority under Section 56(2) of the Stamp Act and by his order dated 20th of January, 1965, held that the document in question was a lease chargeable with a duty of Rs. 4,185/-under Article 35 (b) of the U. P. Stamp (Amendment) Act, 1962 on the premium of Rs. 93,000/- representing the consideration for which the right to collect was let out as a result of the auction. The bidders, feeling aggrieved by the decision of the Collector, filed a revision before the Chief Controlling Revenue Authority under Section 56(1) of the Stamp Act but the same was rejected on the ground that the Chief Controlling Revenue Authority had no jurisdiction to interfere under Section 56(1) with the decision of the Collector under Section 31 of the Stamp Act. The bidders thereafter filed a writ petition challenging the order of the Board of Revenue which was later on numbered as writ petition No. 3585 of 1967, Gajey Pal Singh v. Board of Revenue. The writ petition was allowed and the order of the Board was quashed and the Chief Controlling Revenue Authority was directed to decide the Revision Application on merits under Section 57(1) in accordance with law after hearing the parties. Consequent on the order of remand, the Board of Revenue took the view that the document in question is a lease in consideration of a premium of Rs. 93,000/- in conformity with the opinion of the Collector. He was also of the view that the Chief Controlling Revenue Authority was not competent to revise or confirm the decision of the Collector under Section 31 of the Stamp Act. But as this Court had directed a reference to be, made under Section 57(1), the document has been referred to this Court for decision on the following questions:--
1. Whether the document is a lease for a period of 3 years within the meaning of Section 2(16)(c) of the Stamp Act.
2. If so, whether it is a lease in consideration of a premium of Rs. 93,000/-and is chargeable with a duty of Rupees 4,185/- under Article 35 (b), Schedule 1-B of the U. P. Stamp Amendment Act, 1962.
3. If not, whether the document is a lease for 3 years in consideration of an yearly rent of Rs. 31,000/- chargeable with a duty of Rs. 1,395/- under Art. 35 (a) (ii), Schedule 1-B of the U. P. Stamp Amendment Act, 1962.
4. In case the answer to the first point is in the negative, what is the nature of the document and what amount of duty is chargeable in respect thereof.
4. In order to appreciate the point involved in the case, it would be relevant at this stage to refer to the relevant provisions of the Indian Stamp Act in so far as they are material for the decision of this case. Article 35 of Schedule 1-B of the U. P. Stamp (Amendment) Act, 1962 reads as below:--
'35.Lease, including an under-lease or sub-lease and any agreement to let orsublet -
(a) Where by sub-lease the rent is fixed and no premium is paid ordelivered.
(i) Where lease purports to be for a term not exceeding oneyear;
The stamp duty as a Bond (No. 15) for the whole amount payableor de-liverable under sub-lease.
(ii) Where the lease purports to be for a term exceeding oneyear but not exceeding five years :
The stamp duty as a conveyance (No. 23) for a considerationequal to the amount or value of the average annual rent reserved.
(iii) ... ... ... ...
(iv) ... ... ... ...
(v) ... ... ... ..
(b) Where the lease is granted for afine or premium, formoney advanced and where no rent is reserv-ed:
The same duty as a conveyance (No. 23) for a consideration equalto the amount or value of such line or premium, or advance as set forth inthe lease.
(c) Where the lease is granted for a fine or premium, or formoney advanced in addition to rent reserved
The same duty as a conveyance (No. 23) for a consideration equalto the amount or value of such fine or premium, or advance as set forth in thelease, in addition to the duty which would have been payable on such lease ifno fine or premium or advance had been paid or delivered: Provided that, inany case when an agreement to lease is stamped with the ad valorem stamp requiredfor lease, and a lease in pursuance of such agreement is subsequently executedthe duty on such lease shall not exceed two rupees and 25 paise.'
5. The lease, in the instant case, is for a period exceeding one year, but not exceeding five years. If the lease is granted for a premium and where no rent is reserved, the case would be governed by Section 35(b). On the other hand, if the lease was granted for no premium and rent was reserved, the case would be governed by Section 35(a)(ii).
6. Section 35(c) contemplates a situation where the lease is granted for a premium or for money advanced in addition to rent reserved.
7. Lease' is a defined term. Section 2(16) defines lease as below:
'2 (16) 'Lease' means a lease of immovable property, and includes also--
(c) Any instrument by which tolls of any description are let.'
8. Regarding the first question, Sri L. P. Naithani, appearing for the bidder, and Sri V. D. Singh, Standing Counsel, for the Board of Revenue, conceded that the instrument in question is a document of lease. AH the ingredients of Section 2(16) of the Indian Stamp Act are fully satisfied in this case and it is conceded by both the parties that the document in question is certainly a lease within the meaning of Section 2(16)(c) of the Indian Stamp Act.
9. The answer to the second question hinges on the interpretation of the instrument in question. If once it is accepted that the instrument in question amounts to a lease for a term exceeding one year, but not exceeding five years, Article 35 (a) (ii) would be attracted, if by such lease rent is fixed and no premium has been paid or delivered. Whether the lease in question was for a rent or for a premium is the crucial question on which the answer to the second question would depend. The difference between a premium and rent has been clearly made out by the Supreme Court in Commr. of Income-tax v. Panbari Tea Company Ltd. : 57ITR422(SC) . While dealing with Section 105 of the Transfer of Property Act, the Supreme Court observed:
'Section 105, Transfer of Property Act brings out the distinction between a price paid for a transfer of a right to enjoy the property and the, periodic payment of rent to the lessor. When the interest of the lessor is parted with for a price, the price paid is premium or Salami. But the periodical payments for the continuous enjoyment of the benefits under the lease are in the nature of rent. The former is a capital income and the latter a Revenue receipt. The parties may camouflage the real nature of the transaction by using clever phraseology. There are cases where the so-called premium is in fact advance rent and in others rent is deferred price. It is the substance of the transaction and not the form that matters. The nomenclature may not be decisive or conclusive but it helps the Court, having regard to the other circumstances, to ascertain the real intention of the parties.'
10. In Union of India v. Caltex (India) Ltd., New Delhi a Full Bench of the Punjab High Court took the view that:--
'For attracting Article 35 (c), it is to be shown that money paid in advance seeking it is payment prior to arising of liability on account of rent and that payment is in addition to rent reserved.'
11. Again a Full Bench of the Madras High Court in the Chief Controlling Revenue Authority. Madras v. S. M. Abdul Jammal : AIR1970Mad288 , reiterated the same principle. It observed ;
'The distinction between a premium and a rent is that premium is one paid in consideration of the conveyance implied in the lease and is quantified in lump, whether it is paid outright or by instalments over a period or promised to be paid at a certain time. But, a rent, while it is also so in consideration of a lease, is in lieu of the enjoyment which the lessee has and particularly as consideration therefor. The further feature of rent is, it is payable as and when it accrues unlike a premium the liability for which arises at the time the contract is entered into.'
12. The Standing Counsel, on the other hand, referred to Jagannath v. Behari, (AIR 1921 Nag 137). A learned single Judge brought out the distinction between the premium and the rent in the following terms:--
'The term 'Premium' should be regarded as the equivalent of the vernacular Nazrana by which is commonly meant, a payment made in lump when a lease is granted or renewed. In the Central Provinces, it is usual when Nazrana is taken to take also a periodical rent. The term 'rent' as defined in Section 2 (8) of the Tenancy Act may include a Nazrana.'
13. In view of the pronouncement of the Supreme Court, the legal position in quite clear. When the interest of the lessor is parted with for a price, the price paid is premium and the periodical payments for continuous enjoyment of the benefits under the lease are in the nature of rent. Now, we have to examine the instrument in question as to whether it is a lease for a premium or for a rent. The relevant portion of the instrument is as follows:--
'Hum ki Gajey pal Singh ... ... ... ... va Tribhuwan Kumar ... ... ... ... ... ... Zila Parishad, Muzaffarnagar se pul pacca Rajpur Chajpur Tehsil Budhana Zila Muzaffar Nagar jo Krishna Nadi per hai waste samai 1 October san 1963 se 30 September, san 1966 tak bamuddat teen saal ke liya bahisab 31000 rupiya salana ke ankan 93000 rupiya me lete hain, aur vada karte hain aur yeh ikrarnama likhte hain ki ham thekedaran nimnlikhit sharton ke paband honge.
1. Yeh ki humko jo 1-10-1963 se 30-9-1966 tak thekedar rakkha gaya hai yeh adhikar hoga ki kul aisi janta se kar wasool karenge jo pul pacca Rajpur Chajpur ko theke ki audhi October 1 san 1963 se 30 September san 1966 tak par karenge.
2. Yah ki hum thekedaran is bat ke liye paband honge ki hum theke ki rakam ko nimnlikhit quiston me sab se pas ke sarakari Khazana me nishohit dinank par peshgi dakhil karden, Ankan 7750 rupiya jo humne Zila Parishad Muzaffarnagar se kul theke ke bare me jama kiya hain zare Amanat theke ki akhri qiston me mujra honge.'
14. The underlined portion in the instrument clearly indicates that Rupees 93,000/- was a premium and not rent. Of course, the premium was not to be paid in lump but it was to be paid in three instalments. In Clause 2, the underlined portion clearly stipulates that the premium was to be paid in three instalments. On scanning the document, it is quite clear that this amount was paid for transferring the lessee right. It was a 'capital gain' and not a revenue receipt.
15. Sri L.P. Naithani, however, contends that the lease was given to the highest bidders on an yearly rent of Rs. 31,000/-. It has already been pointed out in the earlier part that the premium can be paid in lump sum or it can be paid in instalments. By the mere fact that the premium was to be paid in three instalments, the nature of the consideration would not be changed and it would continue to be the premium and would not be converted into rent. The Board of Revenue was also guided by the fact that the document in question did not refer to any rent and it referred only to theka money which obviously means premium. As pointed out by the Supreme Court, it is not the form but the substance which matters. We are not to be guided by the nomenclature but to see whether the document in question satisfied the requirement of a lease for premium or rent.
16. If the lease is for a premium and not for rent, the applicability of Article 35 (a) (ii) is completely ousted. Now, the question is whether the case would be governed by Article 35 (b) or (c); (c) contemplates a case where the lease is granted for a fine or premium, or for money advanced in addition to rent reserved. In the instant case, there is no reservation of rent. In view of our finding that the lease in the instant case was not for rent, but for premium and unless there is a premium in addition to rent. Article 35 (c) would not be attracted the only alternative naw left is of the applicability of Section 35(b). The conditions of Article 35 (b) are fully satisfied in this case. The lease in the instant case was granted for a premium, or for money advance, and there being no reservation of rent, this Article would be fully applicable to the instant case.
17. For the foregoing discussion, we answer the first and the second questions in the affirmative and the third in the negative. In view of our answer on question No. 1, no answer is called for regarding question No. 4.