R.B. Misra, J.
1. These two references under Section 57 of the Indian Stamp Act, 1899 (Act No. II of 1899) have been made by the Board of Revenue, U. P. as the Chief Controlling Revenue Authority. The questions referred in the two references are common and, therefore, both of them are being disposed of by a common judgment.
2. It appears that the Municipal Board, Bisalpur, District Pilibhit, held auctions for letting out the right of collection of Tah Bazari for the year 1965-66. The auction was held in the presence of the three members of the Municipal Board. In Stamp Act Reference No. 412 of 1971, Yaqoob Khan offered the highest bid of Rs. 16,500/- and in Stamp Act Reference No. 414 of 1971, Iqrar Khan offered the highest bid of Rs. 15,000/-. Both the bids were for a sum above Rs. 250/-. A bid sheet was prepared, which among others, was signed by Yaqoob Khan and Iqrar Khan. The auctions were closed in their names and they were required to deposit the Zar-i-Chahrum. This was again signed by them as well as by the three members of the Municipal Board, mentioned above. The Board accepted the above bids on a subsequent date.
3. The Inspector of Stamps and Registration, Bareilly, inspected the records of the office of the Municipal Board, Bisalpur, and examined the aforesaid bid sheet. In his opinion, the bid sheet amounted to an agreement to let 'tolls and was, consequently, chargeable to stamp duty under Article 35 (b), Schedule I-B of the U. P. Stamp (Amendment) Act, 1962. He accordingly, impounded the same and acting as the Collector under Section 40 of the Stamp Act by virtue of the powers conferred upon him by U- P. Government Notification No. C-4135/X-525, dated 20th August, 1928, imposed deficit duty of Rs. 742.50 p. and a penalty of Rs. 100/- on Yaqoob Khan and, likewise, imposed a deficit stamp duty of Rs. 675/- and a penalty of Rs. 50/- on Iqrar Khan.
4. Yaqoob Khan and Iqrar Khan made applications to the Board of Revenue under Section 56(1) of the Indian Stamp Act for setting aside the imposition of stamp duty by the Inspector of Stamps. During the course of arguments, they prayed that certain questions of law of general importance were involved in the case and they might be referred to this Court under Section 57 of the Indian Stamp Act for decision.
5. The Board of Revenue took the view that the bid sheet under reference is an agreement to let tolls for a premium and falls within the definition of a lease, as given in Section 2(16)(c) of the Indian Stamp Act and is chargeable to stamp duty under Article 35 (b), Schedule I-B of the U. P. Stamp (Amendment) Act, 1962 and referred the following questions of law for decision to this Court:--
1. Whether the bid sheet Annexure I is an agreement to let tolls for a premium of Rs. 16,500/- and is chargeable under Article 35 (b), Schedule I-B of the U. P. Stamp (Amendment) Act, 1962, with a duty of Rs. 742.50 Or
2. Whether the bid sheet was an agreement to let tolls for one year reserving an annual rent of Rs. 16,500/- and was chargeable under Article 35 (a) (1), Schedule I-B of the said Act with a duty of Rs. 371.25 ?
3. In case it is not held to be an agreement to a lease, is the bid sheet a mere licence and is chargeable under Article 5 (c), Schedule I-B of the U. P. Stamp (Amendment) Act, 1962 with a duty of Rs. 2.25 ?
4. In case the bid sheet is not held to be a lease or licence, what would be the nature of the document for purposes of Stamp Act and what duty was payable on it ?'
Article 35 (b), Schedule I-B reads as under:
'35. Lease, including an under-lease or sub-lease and any agreement to let or sublet.
(b) where the lease is granted for a fine or premium or for money advanced and where no rent is reserved.'
6. From a perusal of this Article, it is clear that the stamp duty will be leviable under this Article if the instrument amounts to a lease.
7. Section 2(16) of the Indian Stamp Act defines lease. In so far as material for the purpose of this case, it reads; -
'2 (16). 'Lease' -- 'Lease' means a lease of immovable property, and includes also-
(c) any instrument by which tolls of any description are let;
Instrument is also a defined term under the Indian Stamp Act. Section 2(14) defines 'instrument' as under:
'2 (14). 'Instrument'.-- 'Instrument' includes every document by which any right or liability, is or purports to be created, transferred, limited, extended, extinguished or recorded.'
Before the document in question can be held to be a lease, it has to satisfy two conditions:
(i) it must be an instrument, and
(ii) tolls of any description are let by the same.
8. Bid Sheet, in our opinion, is not covered within the definition of the tern 'instrument'. It only amounts to an offer by one party and, by this offer, no right or liability is created by the bid sheet.
9. Section 17 of the Indian Stamp Act requires that all instruments chargeable with duty and executed by any person in India shall be stamped before or at the time of execution. The expressions 'executed and execution' are also defined terms. Section 2(12) of the Indian Stamp Act defines 'executed' and 'execution' used with reference to instrument, mean 'signed' and 'signature'. It is, therefore, crystal clear that the relevant time for stamping a document chargeable with duty is either before or at the time of execution. The bid sheet in this case was signed after the bid was over. At the time of signing the bid sheet, it was only in the shape of an offer which might or might not be approved by the Municipal Board. An agreement comes into existence only when there is an offer on the one hand and acceptance on the other. When Yaqoob Khan and Iqrar Khan signed the bid sheet, it only meant that they made an offer. It is true that the offer made by them was, subsequently, accepted by the Municipal Board. But the precise question for decision 'in this case is whether the bid sheet when it was executed, which means when it was signed, by the bidders amounted to an agreement.
10. The Chief Standing Counsel referred to B. C, Mohindra v. MunicipalBoard, Saharanpur, 1970 All LJ 570 = (AIR 1970 SC 729). In that case, it was held that the list of bids and the resolution of the Board accepting the bids constituted a contract in writing within the meaning of Section 97 of the Act and it was not necessary for the purpose of complying with Section 97 of the Municipalities Act that the contract should be contained in one document signed by both the parties. On the strength of this authority, it is contended by the Chief Standing Counsel that the bid sheet coupled with the acceptance of the Board constituted an agreement. The above case is not of much help in the present case. The question for consideration before the Supreme Court was whether a contract came into existence within the meaning of Section 97 of the U. P. Municipalities Act. Section 97 deals with the execution of the contracts. It provides that every contract made by or on behalf of a Board whereof the value of the amount exceeds Rs. 250/- shall be in writing; provided that unless the contract has been duly executed in writing, no work including collection of materials in connection with the said contract shall be commenced or undertaken. Sub-section (2) of Section 97 provides that every such contract shall be signed by the President or a Vice President and by the Executive Officer or a Secretary, or by any person empowered by the Board. The Supreme Court laid down that the list of bids and the resolution of the Board according acceptance constituted a contract in writing within the meaning of Section 97 of the Act. In its opinion, a valid contract could be spelt out of a correspondence between the parties and it is not at all necessary for the purpose of Section 97 of the U. P. Municipalities Act that the contract should be contained in one document signed by both the parties.
11. The question before us, however, is not whether a contract came into existence or not within the meaning of Section 97 of the U. P. Municipalities Act The question is whether the bid sheet, when it was signed by the highest bidders, amounted to an agreement creating right or liability. The subsequent acceptance by the Board of the offer made in the bid sheet will not make the bid sheet an agreement creating right of title at the time or before its execution.
12. Sri S.J. Hyder, appearing for the bidders, strongly relied upon a Full Bench decision of this Court in Tirlok Chand v. Chief Controlling Revenue Authority, 1973 All LJ 556 = (AIR 1973 All 473). In that case, the Full Bench laid down that a bid-sheet recording bids of auction of a toll is not agreement to let tolls and as such is not included within the meaning of a lease as given in Section 2(16)(c) of the Stamp Act read with Article 35 thereof and is not chargeable under Article 35 (b) of Schedule I-B of the U. P. Stamp (Second Amendment) Act, 1958 with a duty. Such a document is not chargeable with any stamp duty under any other Article of the Stamp Act. In the opinion of the Full Bench, the bid sheet only contains a memo of highest bids made by various persons, who participated in the auction. It does not contain any terms or conditions relating to:
1. The maximum rate or tolls chargeable by the applicant.
2. The duration of the lease.
3. The mode, manner and time of the payment of the auction money.
4. The consequences of any breach on the part of the applicant of the terms of the agreement.
In the absence of some of these conditions, the agreement, if any, that came into existence would be unenforceable on the ground of vagueness.
13. Reference was also made to another Full Bench decision of the Madras High Court in Crompton Engineering Co. (Madras) Ltd. v. Chief Controlling Revenue Authority, Madras, AIR 1953 Mad 764. In that case, the mortgage deed was neither attested nor registered. While construing the term 'transfer', as provided in Section 2(17) of the Stamp Act, the Full Bench held;
'The 'transfer' provided for in Section 2(17) is a transfer valid-in-law. To make a document liable to stamp duty as a mortgage deed, it is not enough if the document purports to effect a transfer. It must 'transfer'. As there can be no transfer unless the requirements of T. P. Act, Section 59, are satisfied where the specified immovable property is worth hundred rupees or upwards, a document purporting to be a mortgage deed of such property is not liable to stamp duty when it is neither attested nor registered.'
14. This case related to mortgage. Section 2(17) of the Stamp Act defines 'mortgage deed'. It reads;
'2 (17) Mortgage deed-- 'Mortgage deed' includes every instrument whereby, for the purpose of securing money advanced, or to be advanced, by way of loan, or an existing or future debt, or theperformance of an engagement, one person transfers, or creates to, or in favour of, another a right over or in respect of specified property.'
15. In view of the definition of the term 'mortgage deed' as given in Section 2(17) of the Stamp Act, the Full Bench took the view that there must be transfer of interest in respect of specified property.
16. The Chief Standing Counsel referred to another Full Bench in the case of Hazrami Gangaram v. Kamlabai, AIR 1968 Andh Pra 213. In that case, the Fall Bench laid down the following proposition :--
'For the purposes of the Stamp Act, the crucial time for determining whether an instrument chargeable with duty is duly stamped or not is before 'or at the time of its execution and apart from its execution, no other formalities under any other law need be satisfied. There is no warrant for the importation of the requirements of either of the Transfer of Property Act or the Registration Act to construe documents or instruments under the Stamp Act as the latter Act itself specifically defines the terms used therein. To hold that an instrument must be a valid one under law before it is liable to stamp duty will be to ignore the requirements of the definition or to make them otiose. Further, if the document required registration for legal validity before it can be considered whether it is liable for stamp duty or not, then the Registrar cannot impound it before registration, though he ig so authorised under Section 33 and under Section 35 unless an instrument is duly stamped, it cannot be registered or received in evidence. In other words, the definitions and the terms of every section of the Act indicate clearly that an instrument need not be valid in law or meet the requirements of law as a valid document before it is chargeable to stamp duty under the Act.'
17. Next reliance was placed on a Full Bench decision of the Madras High Court in Chief Controlling Revenue Authority, Madras v. Canara Industrial and Banking Syndicate, Ltd., Madras, AIR 1969 Mad 1. In that case, it was held:
'A document has to be considered as chargeable to stamp duty, when it is executed, -which term 'executed' itself has to be interpreted in the light of the definition embodied in Section 2(12).
Under Section 2(12) 'executed' weans 'signed and 'execution.' means''signature', so it is clear that this will include the signatures of all persons, who are required by the character of the document to sign in the document, in order to give that document effect according to law. Therefore, if a document is of such a character that both parties to the document should sign it, to constitute it a binding agreement between them, it should contain the signatures of both; similarly, if it had to be signed by two other attestors in order to make it legal, this will also be necessarily part of the definition: But, once a document is complete in execution in this sense, and the effective words of disposition are there, immediately transferring rights by the very virtue of the document, the question of its subsequent registration is a distinct matter altogether, and the document is certainly liable to stamp duty with reference to the relevant Article of the Stamp Act, since execution is complete. Though registration is necessary under the law, to give legal effect to the document, it is not merely a power of the executant to register the document, the party to whom the interest is conveyed can also have it compulsorily registered. Obviously, the category under which an instrument falls cannot be affected by the mere absence of registration, if the document is otherwise fully dispositive' in character, and duly executed.'
18. There seems to be a cleavage of judicial opinion on the question whether a document in order to require stamps must be a valid document in all respects. It is, however, not necessary in this case to enter into that controversy. In the instant case, we are concerned with lease of tolls, as defined in Section 2(16)(c) of the Stamp Act. As stated earlier, lease includes an instrument by, which tolls of any description are let. An instrument includes every document by which any right or liability is or purports to be created. The bid sheet, in our opinion, neither creates nor purports to create any right or liability. It, therefore, fails to satisfy the requirements of an instrument much less an instrument of lease.
19. For the reasons given above, all the four questions are answered in the negative.