Hari Swarup, J.
1. The Chief Controlling Revenue Authority, U.P. i.e. the Board of Revenue, has made the reference under Section 57 of the Stamp Act for our opinion on the following questions:
(i) Whether the document under reference is a lease or an agreement to let immovable property and duty is payable on it under Article 35, Schedule 1-B of the Stamp Act, as amended in its application to U.P. vide U.P. Stamp (Amendment) Act, 1962?
(ii) If the answer to the above question is in the affirmative, then whether the document would fall under Clause (c) of the aforesaid Article 35 and the total amount of Rs. 3,78,095.73 (representing Rupees 69,591.21 already paid on account of a premium, Rs. 49,136.10 already paid as development charge and Rs. 1,59,368.42 promised to be paid as development charges) would be treated as premium and Rs. 732.50 as annual rent for calculating the proper stamp duty due thereon and whether additional stamp duty @ Rs. 2 as imposed by Section 67-H of the U.P. Town Improvement Act, 1919 (U.P. Act VIII of 1919) as amended by Section 5(1) of the U.P. Local Self-Government Laws (Amendment) Act, 1966 (U.P. Act XXIX of 1966), on deeds of transfer of immovable property situated within the limits of Ghaziabad Regulated Area vide U.P. Government Notification No. 1102 H/ XXXII-50(24) H/59 dated July 20, 1960, (published in U.P. Gazette Part I page 1107 dated 23-7-1960) will also be payable on the document on the total amount on which stamp duty is payable?
(iii) If the document under reference is held to be chargeable with duty under Article 35(c) of Schedule 1-B, then whether the subsequent lease deeds, giving possession in respect of portion of land detailed in Schedule B to the document, to be executed by the Improvement Trust in favour of the nominee of party No. II will be chargeable with duty under Article 25 (c) Schedule I-B on the amount of premium stated therein and rent reserved thereunder and whether additional duty @ Rs. 2 as imposed by Section 67-H of the U.P. Town Improvement Act, 1919 (U.P. Act VIII of 1919) as amended by Section 5(i) of the U.P. Local Self-Government Laws (Amendment) Act, 1966 (U.P. Act XXIX of 1966) on deeds of transfer of immovable property situated within the limits of Ghaziabad vide U.P. Government Notification No. 1102 H/XXXVII-50(24) H/50 dated July 20, 1960 will also be payable thereon or whether such documents will be chargeable with duty of Rs. 2.25 only under proviso to Article 35 of Schedule I-B?
(iv) Whether the Inspector of Stamps and Registration, Meerut acting as Collector under Section 40 of the Stamp Act or the Board of Revenue, as the Chief Controlling Revenue Authority, acting under Section 56(i) thereof, are barred on the principle of res judicata and stare decicis from examining the question of proper stamp duty payable on the document for the reason that the Collector, Meerut, had acting under Sections 31/32 of the Act, endorsed certain other documents on which a duty of Rs. 2.25 had been paid as properly stamped?
(v) If the answer to question No. (i) is in the negative then whether the obligation to pay a sum of Rs. 1,59,368.42 contained in Clause (3) of the document, having been attested is a bond under Section 2(5)(b) of the Stamp Act and is chargeable with duty under Article 15, Schedule I-B of the Act?
(vi) Whether the document is a simple agreement covered by Article 5(c) of Schedule I-B of the Stamp Act and is, as such, properly stamped?
2. Certain lands described in Schedule A of the document in dispute were acquired under the provisions of the Land Acquisition Act for purposes of the Improvement Trust of Ghaziabad from Darbari Singh Saini, applicant, and certain other persons. The Improvement Trust entered into an agreement with the applicant and other owners separately in respect of the lands acquired and the agreement with applicant is the subject-matter of the reference. The document was described as an agreement and was stamped with Rs. 2.25 P. By this agreement the Improvement Trust agreed to execute in favour of the applicant or his nominees deeds of lease in respect of the land described in Schedule B of the document in consideration of certain payments of premium, development cost and money equivalent to lease rent by the applicant or his nominees. The applicant paid to the Improvement Trust a sum of Rs. 69,591.21 which was described as premium and also a sum of Rs. 49,156.10 which was described as initial deposit being 20 per cent of the development charges and promised to pay further a sum of Rs. 159,362.42 in eight half-yearly instalments representing ten per cent of the development charges and also promised to pay a further sum of Rs. 732.05 per annum which was described as equivalent of lease land. All these amounts were paid or were payable to the Improvement Trust. In consideration of these payments the Improvement Trust undertook to execute a deed or deeds of lease in respect of one or more of the plots in Schedule B for a period of ninety years, in favour of the applicant or his nominees. Quite a number of similar agreements were executed between different parties. The Improvement Trust on 29-8-70 sent a pro forma of the draft agreement similar to the one under reference to the Collector Meerut with the request that proper stamp duty thereon be assessed. The A.D.M. (E) Meerut gave the opinion that the agreement was chargeable with stamp duty under Article 5 (c) of the Stamp Act and also as an agreement to lease with the stamp duty under Article 35 of Schedule I-B of the Act, He requested the Improvement Trust to supply the particulars for the opinion about the quantum of duty payable. The Improvement Trust then obtained the opinion of its counsel and forwarded it to the Collector. After considering the opinion, the Improvement Trust was informed that the documents may be treated as a pure agreement and the stamp duty chargeable thereon was only Rs. 2.25. Similar documents are said to have been executed after this opinion, on stamn of Rs. 2.25. The document under reference is similar in nature to the document the draft of which was sent to the Collector, but when the document was presented before the Sub-Registrar, Ghaziabad, for registration, the Inspector of Stamps and Registration happened to examine it and he being of opinion that the document constituted a lease held it to be liable to be stamped under Article 35(c) of Schedule I-B of the U.P. Stamp Amendment Act, 1962 with stamp duty of Rs. 18,288.75. Accordingly the document was impounded and action was taken under Section 40 of the Stamp Act by the Inspector who is also the Collector under the Stamp Act. Besides requiring the deficiency in duty to be paid he also imposed a penalty of Rs. 100.
3. Aggrieved by this order, the applicant filed a revision under Section 56 (1) of the Act to the Chief Controlling Revenue Authority (the Board of Revenue). The Board of Revenue was of opinion that the document was an agreement to lease and was liable to stamp duty under Article 35(c) of Schedule I-B of the Stamp Act. A further contention raised before the Board was to the effect that the opinion expressed by the Collector in similar cases, to the effect that the document was a simple agreement covered by Article 5 (c) and liable to be stamped with Rs. 2.25 only, was a decision which on the principles of res judicata and stare decisis affected the present document also and the Collector was bound by that decision. The Board was of opinion that this contention was not correct, but since it was of the view that important questions of interpretation of the provisions of the Stamp Act were involved and were of general importance, it has referred to us the aforesaid questions of law.
4. Learned counsel for the applicant has contended that the decision given by the Collector under Sections 31/32 of the Act was of binding effect and on the principles of res judicata and stare decisis the Collector could not now demand higher stamp duty on the document in question. We see no force in this contention. The certificate issued under Section 32 when an instrument is brought to the Collector under Section 31 is in respect of that particular . document only and cannot operate on any other document. Section 31(1) of the Act states:
'When any instrument, whether executed or not and whether previously stamped or not, is brought to the Collector, and the person bringing it applies to have the opinion of that officer as to the duty (if any) with which it is chargeable, and pays a fee of such amount (not exceeding five rupees and not less than fifty paise) as the Collector may in each case direct, the Collector shall determine the duty (if any) with which, in his judgment, the instrument is chargeable.'
Under Section 32(1) of the Act the Collector has to certify by endorsement on that very instrument. Sub-section (3) of Section 32 of the Act says:
'Any instalment upon which an endorsement has been made under this section, shall be deemed to be duly stamped or not chargeable with duty, as the case may be; and, if chargeable with duty, shall be receivable in evidence or otherwise, and may be acted upon and registered as if it had been originally duly stamped......'
It is thus apparent that a certificate issued by the Collector in each case is in respect only of the particular instrument certified and is not meant to be operative in respect of instruments of a similar nature not brought before him for certification. The opinion of the Collector in an earlier case thus cannot debar him from giving a different opinion subsequently on the principle of stare decisis. It can also not debar him from arriving at a different conclusion to which he has arrived in the present case on the principle of res judicata as there was neither a judicial determination of the matter by the Collector nor the present applicant was a party to the earlier instrument. We accordingly answer question No. 4 referred to us in the negative.
5. The only other question pressed by learned counsel for the applicant is question No. 1, question No. 2 has not been pressed. Question No. 3 does not arise at this stage. It would arise only if and when the applicant nominates other persons for taking the lease and the lease is actually executed by the Improvement Trust in their favour. We accordingly return questions Nos. 2 and 3 unanswered.
6. Questions 1 and 6 are interrelated and question No. 5 will not arise if our answer to question No. 1 is in the affirmative. The clauses of the instrument relevant for the purposes of the reference are as follows:--
'And whereas further the second party has expressed its option to obtain lease either in his favour or in favour of his nominee (s) in 40% of his acquired land as developed plotted area.
And whereas in pursuance of the said option the Trust is prepared to give to the second party the developed plotted area as stated above and more particularly described in Schedule B on the terms hereunder mentioned.
Now, therefore, this agreement incorporating the respective obligations of both the parties witnesseth as follows. .......'
'(5) In consideration of the payment by the second party of the amount of the premium, development cost and money equivalent to lease rent as stated in clause 4 above and also of its obligations to perform the terms and conditions of this agreement, the Trust undertakes to execute in favour of any person competent to contract and nominated by the second party a deed of lease in the form enclosed for maximum period of 90 years reckoned to have commenced from the date of initial deposit of development cost by the second party as contemplated above, of one or more of the plots in Schedule B in no case in area exceeding the proportion which the development costs actually paid bear to the whole amount thereof as provided in this agreement, it being clearly understood that to the extent such proportion covers only a fraction of a plot the same shall be ignored.
'(6) The second party would be bound to obtain lease deed(s) in favour of its nominee(s) in any case within five years from the date of allotment order and in case he fails to do so, the Trust may require it to have the same executed in his own name failing which the Trust will have a right to execute lease deeds in favour of any person of its own choice and the money obtained as premium under that lease by the Trust shall be payable to the second party after deducting the expenses, if any, incurred in executing the lease deed and the audit fee paid by the Trust over the money received as premium.
'(7) In case of failure of the second party to perform any of the terms and conditions or covenants provided for in this agreement or the failure to pay any money as provided herein, the Trust shall be entitled to determine this agreement whereafter the second party shall forfeit his right to obtain leases in respect of plots for which lease deeds have not been executed up to the date of determination either in his favour or in favour of his nominee(s) without prejudice to the rights, however, of second party to settle account of moneys payable by or to the Trust upto the date of determination.
'Provided that failure to pay any two instalments alone of the development cost shall not entail the consequence of determination of the agreement.'
The terms extracted above from the instrument make it clear that through the present agreement the Improvement Trust had undertaken to grant in future a lease in favour of the first party or his nominees by executing necessary lease deeds and the first party had for the purpose of obtaining that lease paid certain amounts by way of premium and rent to the Improvement Trust. The lease was to be in respect of the plots mentioned in Schedule B to the document. By this document the parties had agreed to obtain a lease in respect of an immovable property. plainly the document will be an agreement to let.
6A. Learned counsel for the applicant contended that as there was no present demise of the land, the instrument could not be an agreement to let. Continuing the contention he urged that as the lease was to come into existence only after the land had been developed it was an agreement of a contingent nature and could not amount to an agreement to lease for purposes of the Stamp Act. The point of contingency in our opinion is hardly relevant for determining the nature of the present instrument the rights dealt with by which are subject to no contingencies. What may be dependant on the contingencies, which are only of the nature of defaults, will be the execution in future of actual deeds. If the present agreement binds the parties to give on lease the land, it would not cease to be an agreement to lease merely because of some default of a party, lease may not actually be given.
7. For deciding whether a demise either in presenti or in future is an essential requisite of an agreement to lease or let, a true construction of the provisions of the Act relating to payment of stamp duty on agreements to lease would be essential and for that purpose it would be appropriate to see the historical development and the entries in the earlier enactments. The Indian Stamp Act of 1879 defined lease in Section 3(12) as follows:
'Lease means a lease of immovable property and includes also
(a) a patta,
(b) a kabuliyat or other undertaking in writing, not being a counter part of a lease, to cultivate, occupy or pay, or deliver rent for, immovable property,
(c) any instrument by which tolls of any description are let, and
(d) any writing on application for a. lease intended to signify that the application is granted.'
A document of lease was chargeable under Article 31 of Schedule 1 of that Act. Article 4 of Schedule 1 provided for an 'agreement to lease' and in the second column about stamp duty it was said; 'the same duty as a lease'. The provisions came up for consideration before a Full Bench of the Madras High Court in 'A reference under the Stamp Act' (1894) ILR 17 Mad 280(FB). The Court had to consider an agreement by which there was effected no demise and was followed up by a separate deed of lease through which the property was actually demised. The learned Judge observed:
'We are of opinion that the document is an agreement for lease and that it must be stamped as such under Article 4, notwithstanding that another instrument was intended to be executed.' The Act of 1879 was replaced by the Stamp Act of 1899 and was further amended by the Indian Stamp Amendment Act, 1919. Article 5 in the Schedule contained an entry: 'agreement to lease', but there was a note: 'See lease (35)' and Article 35 ran as follows: 'Lease including an underlease, a sub-lease and an agreement to let or sublet.' Articles 5 and 35 continued in the same form except that by the U.P. Stamp Amendment Act of 1962 the maximum fixed by the Proviso was enhanced. Article 35, as amended in U.P., now runs as follows:
'Provided that in any case when an agreement to lease is stamped with the ad valorem stamp required for lease, and a lease in pursuance of such agreement is subsequently executed the duty on such lease shall not exceed two rupees and, twenty-five paise.'
Hence although there has been a little change in the phraseology, there has been no substantive change in the scheme of the Act so far as the chargeability of an 'agreement to lease' to stamp duty was concerned. An 'agreement to lease' has still been subjected to the same stamp duty as a lease without its being included in the definition of lease. The adoption of a similar scheme of provisions relating to agreements to lease in the new enactment suggests legislative approval of the decision of the Madras High Court in 'A reference under the Stamp Act' (1894) ILR 17 Mad 280(FB) (supra) which was decided on March 1, 1894. The provisions in the Indian Stamp Act now in force must, therefore, receive similar interpretation. Thus even though an agreement to tease may not possess all the characteristics of a lease and may not effect demise of property, it would be chargeable to stamp duty of the same amount as a lease under Article 35 read with the entry about an agreement to lease mentioned in Article 5 of the Schedule.
8. It may be helpful to mark the distinction between the meaning assigned to 'agreement to lease' in the Stamp Act and the Registration Act. In the Indian Registration Act lease has been defined not as it is defined in the Stamp Act, but as:
'Lease includes a counterpart, a Qabuliat, and an undertaking to cultivate or occupy and an agreement to lease'. Under Section 17(1)(d) of the Registration Act, a document .creating a lease of immovable property from year to year or for any term exceeding one year or reserving a yearly rent is compulsorily registrable. Section 49 of the same Act provides:
'No document required by Section 17 or by any provision of the Transfer of Property Act, 1882, to be registered shall....
(a) affect any immovable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting such property or conferring such power, ...... unless it has been registered.'
Under the Registration Act, therefore, an 'agreement to lease must have the same character as a lease and hence if it has not the effect of transferring property, it may not be possible to regard it as an 'agreement to lease'. A demise whether in the presenti or in future may thus be essential for an agreement to be classed as an 'agreement to lease' for being registered as a lease under the Registration Act, but for the purpose of stamp duty it is not necessary that the agreement to lease' should by its own force transfer property or effect demise either in presenti or in future.
9. The proviso added by the U.P. Amendment Act of 1962 to Article 35 (c) in Schedule I-B of the Stamp Act also makes it clear that the agreement to lease may be something different from the lease itself. If the agreement to lease by itself were necessarily to transfer property or effect a demise, there will be no need for a further instrument of lease and the proviso will in all cases be inoperative. An 'agreement to lease' can, therefore, be an agreement which even though binds the parties to execute in future a lease, may not effect the demise by its own force.
10. Learned counsel for the applicant relied on the case of 'In re Indian Stamp Act' : AIR1952Bom199 . It was observed in that case
'Now, it is clear that, in law, an agreement to lease may effect a present demise or it may not. If it effects a present demise, then an agreement to lease would fall under Article 35, if it does not effect a present demise, then an agreement would fall under Article 5 which deals with agreements or memoranda of agreement and would fall under Article 5(c) which deals with all those cases which are not dealt with under Article 5(a) or Article 5(b).'
No reasons have been given by the learned Judges, who decided the case, for holding that the agreement to lease will be covered by Article 5(c) even though Article 5 itself refers to Article 35 for imposition of duty on an agreement to lease. We are respectfully unable to accept the view expressed in that case as, in our opinion, an agreement to lease under Article 35 does not exclude agreements to lease which do not effect a demise either in presenti or in future but contemplate and bind parties to make a lease in future. Moreover, the point did not arise for decision in that case because lease pursuant to the agreement to lease had been executed and the only question was about the payment of stamp duty on the second document, namely, the lease deed. The observation is merely of the nature of obiter dictum. Similarly, with great respect, we are unable to agree with the view expressed by the learned Judges in the case of 'In re Manaklal Manilal' AIR 1928 Bom 553, to the effect that an agreement to lease must amount to an actual demise. The case proceeded on certain presumptions which, in our opinion, were not called for. It was assumed that the provisions of the Registration Act and the Stamp Act could be read together for interpreting the Stamp Act, and that 'Both under the Indian Stamp Act and the Indian Registration Act an 'agreement to lease' is included in the word 'lease'. As already seen, an 'agreement to lease' is included in the term lease' in the Registration Act, but it is not so included in the Indian Stamp Act. There is a separate entry in Article 5 in Schedule I-B of the Stamp Act dealing with an 'agreement to lease' and reference to Article 35 is only for the purpose of the stamp duty payable. An agreement to lease is treated as a different category of instruments than instruments of lease. Hence demise cannot be regarded as an essential element of an agreement to lease when the matter is to be considered with respect to the provisions of the Indian Stamp Act.
11. In the case of 'Gore v. Lloyd', (1844) 12 M&W; 463, dealing with the matter about payment of stamp duty, Lord Abinger, C.B., observed:
'The first question is, whether that document is a lease, and requires a stamp accordingly. There may be many things about which the parties may enter in such a case into a written agreement, without its being a demise, taking it for granted that a demise already exists, or will exist.'
12. Alderson, J. in that very case observed:
'The first question on which we have to decide is, whether this memorandum, stamped as it was, was properly received in evidence as an agreement. The next is, whether, upon the proper construction of the agreement and the parol evidence together, the rent was a forehand rent payable in September. And the third is, whether the Act of executing the warrant of attorney was an act of bankruptcy.
'Now, with respect to the first question, the rule which is laid down in all the cases is that you must look at the whole of the instrument, to judge of the intention of the parties as declared by the words of it, for the purpose of seeing whether it is an agreement or a lease. And, looking at the whole of this instrument, it appears to me that it was not intended to give an immediate right to the party to be from that moment, and before the execution of any lease, a tenant from a future day, but that the true construction of the instrument is, an agreement between the parties that at a future time one of them shall become the tenant, provided certain things are intermediately done by the landlord or his agent, so as to put the premises into a certain state, which the agreement describes,'
We consider that these observations lay down the correct state of law and when applied to the present case the instrument will be an 'agreement to let' within the meaning of Article 35 of Schedule I-B of the Indian Stamp Act and as such will be liable to be stamped with the duty prescribed in the second column of Article 35 in Schedule I-B of the Stamp Act. As an agreement to lease it would be covered by the latter clause of Article 5 referring to Article 35 and not to the earlier part or Article 5 (c) dealing with agreements other than agreements to lease.
13. Our answers to the questions referred by the Board of Revenue accordingly are:
Question No. 1 : Affirmative.
Question No. 2: Returned unanswered.
Question No. 3 : Returned unanswered.
Question No. 4: Negative.
Question No, 5; Returned unanswered.
Question No. 6 : Negative.