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The Secretary to the Commissioner of Salt, Abkari and Separate Revenue, Board of Revenue Vs. Mr. Sutherland Orr - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported in(1901)11MLJ350
AppellantThe Secretary to the Commissioner of Salt, Abkari and Separate Revenue, Board of Revenue
RespondentMr. Sutherland Orr
Cases ReferredPhilips v. Philips
Excerpt:
- - we are clearly of opinion, that the instrument has been rightly stamped as a lease for a term of 3 years, and that the collector was in error, in levying an additional stamp calculated upon an agreement to give a lease for a term of 2 years at the monthly rent of rs.1. the question referred for opinion is, whether an instrument of lease, for a term of 3 years at a monthly rate of rs. 190, with a covenant on the part of the lessor to renew the lease, at the option of the lessee, for a further term of one or two years from the expiration of the said term of 3 years, is rightly stamped only with the duty payable on a lease for a term of 3 years, or whether it should be stamped, with the aggregate of the duties payable on a lease for a term of 3 years and on an agreement to give a lease for a term of 2 years. we are clearly of opinion, that the instrument has been rightly stamped as a lease for a term of 3 years, and that the collector was in error, in levying an additional stamp calculated upon an agreement to give a lease for a term of 2 years at the.....
Judgment:

1. The question referred for opinion is, whether an instrument of lease, for a term of 3 years at a monthly rate of Rs. 190, with a covenant on the part of the lessor to renew the lease, at the option of the lessee, for a further term of one or two years from the expiration of the said term of 3 years, is rightly stamped only with the duty payable on a lease for a term of 3 years, or whether it should be stamped, with the aggregate of the duties payable on a lease for a term of 3 years and on an agreement to give a lease for a term of 2 years. We are clearly of opinion, that the instrument has been rightly stamped as a lease for a term of 3 years, and that the Collector was in error, in levying an additional stamp calculated upon an agreement to give a lease for a term of 2 years at the monthly rent of Rs. 190, Under Article 3,5 of Schedule I to the Stamp Act, 'lease'' includes 'an agreement to let,' and an 'agreement to let' has to be stamped with the same duty as a lease under Section 5 of the Stamp Act, an instrument comprising or relating to several distinct matters, is chargeable, with the aggregate amount of the duties with which separate instruments, each comprising or relating to one of such matters would be chargeable under the Act, and. it is apparently under this section that the Collector has levied the additional stamp duty. It is clear that this section is inapplicable to the transaction and that the instrument in question relates only to one matter and not to distinct matters.

2. The lessee agrees, among other things, to pay a monthly rent of Rs. 190 for the premises in question for a period of 3 years, in consideration of the lessor demising the premises for a period of 3 years and also agreeing to renew the lease, at the option of the lessee for a further term of one or two years. If the covenant to renew were dis-annexed from the lease, there would be no consideration for the covenant to renew per Maule, J., Worthing ton v. Warring ton 17 L.J.N.S 119. A covenant for renewal at the option of the lessee, is an ordinary covenant in great many leases, and for at least two centuries, it has been held to be a covenant running with the land Mr. Farwell, J., in 'Muller v. Trafford' 60 1 Ch. 1901. A mere agreement to lease is not covenant which will run with the land and will not bind a transferee for valuable consideration without notice of the agreement. The transaction or matter to which the instrument in question relates is single and indivisible and cannot be treated as relating to two distinct matters within the meaning of Section 5 of the Stamp Act. The instrument contains only one contract, a demise ; the option of renewal of the lease is ancillary to it and forms part of the consideration for entering into the lease.

3. Worthington v. Warrington is a clear authority for holding that the instrument in question is rightly stamped as a lease for a term of 3 years only. In that case, the lease was for a term of 2 years at a rate of 50 a year, and the lessee also had the right of purchasing the premises, at the determination of the lease or at any time during the term of the lease. It was held that a 30 shillings stamp was sufficient, and the contention that it required an additional 30 shillings stamp, for the agreement to sell the premises to the lessee at his option, was overruled. Cresswell, J., in overruling the contention observed as follows in the course of the argument:--'This is not more than a covenant to renew, which is usual in leases and which do not on that account require two stamps. The lease and the agreement to purchase are the consideration for the rent. If the lease were forfeited, the right to purchase would be forfeited also.' Philips v. Philips 11 Ad. and Ell. 796 supports the same view. In that case, the agreement for a new lease which was contained in an instrument of surrender of a lease for lives, was held to be part of the contract and that the reference to it in the deed was not a 'matter or thing,' not 'incident to the sale and conveyance,' but was necessarily connected with it. In case No. 1 of I.L.R. 1876 M. 133 on reference by the Board of Revenue, it was held that a conveyance with the usual covenant for title, cannot be construed as establishing an indemnity bond, so as to render the document liable to stamp duty as an indemnity bond in addition to the stamp duty to which it is liable as a conveyance. It was there held that an instrument can be regarded as falling under two distinct categories, each requiring a separate stamp only where there is what is called a 'distinct consideration, for each and not where there is a unity of consideration as in the present case.


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