1. This matter comes before us by way of a case stated under Section. 57 (1) Stamp Act (2 of 1899). It is concerned with the adjudication of stamp duty in respect of an indenture dated 5th March 1931 made between the Municipal Board of Lucknow on one side and the United Provinces Electric Supply Company Ltd. on the other. It appears that the Municipal Board of Lucknow was the owner of a certain piece of land which had been acquired by the Government of the United Provinces of Agra and Oudh for the Board under the provisions of the Land Acquisition Act (10 of 1870) and a notification of the Government of the United Provinces of Agra and Oudh No. 2790/11/ 644A/2 dated 17th November 1892. For the purposes of carrying out a scheme of reorganisation of its waterworks the Board had obtained a loan from the Government of the United Provinces of Agra and Oudh of the sum of rupees 18,50,000 under the provisions of the Local Authorities Loans Act (9 of 1914). This loan was repayable in forty half-yearly instalments of Rs. 80,035 as from 30th September 1927. A part of this loan had been applied in the erection on the piece of land in question of an electric generating station and all the necessary plant and machinery connected therewith.
2. The United Provinces Electric Supply Company Limited (hereinafter referred to as the applicants') is a company incorporated under the Companies Act of 1913 and has its registered office at 12 Mission Bow Calcutta and this company was the holder of an electric license issued to it under the provisions of the Indian Electricity Act of 1910 known as the Lucknow Electric License 1914 and also of amending electric licenses issued to the company on 15th March 1916 and 25th January 1924 under the provisions of the Electricity Act. The company entered into an agreement with the Board on 5th March 1931 for the supply of such electrical energy as might be needed for municipal purposes as set forth in that agreement-which was known as the Bulk Supply Agreement-and for the purposes of the supply, the Board agreed to grant a lease to the company of the land in question and of the electric generating station upon the terms and conditions set out in a deed which is the indenture of 5th March 1931, which indenture is the subject matter of the present proceedings. On 22nd April 1931, the applicants lodged this indenture with the local Collector for the purpose of the adjudication of the stamp duty chargeable upon it. By the indenture the Board, as I have stated, granted a lease of the land already mentioned, together with the buildings upon it, to the company, for a term of 34 years and 170 days in consideration of the payment of a yearly rent of Rs. 3,000 and of the repayment by the company of the balance of the moneys borrowed by the Board from the Local Government amounting to the sum Rs. 16,62,500 in 35 half-yearly instalments of Rs. 47,500. Put shortly, it was agreed in the indenture that if the company paid up the whole of the apportioned loan either by instalments or in a lump sum, then the electric generating station with the buildings and appurtenances would become the absolute property of the company. The applicants have stamped the document for the amount of Rs, 180-120 upon the footing that it was a lease at a rent of Rs. 3,000 per annum for the term of 34 years and 170 days and thus fell within Article 35 (a) (vi), Sch. 1, Stamp Act and also an agreement falling within Article 5 (c), Sch. 1, Stamp Act. The Collector of Stamp Revenue however treated the document as being a lease for a period of 34 years and 170 days at a yearly rent of Rs. 3,000 with a premium payable of Rs. 16,62,500 and accordingly assessed it for stamp duty not only under Articles 35 (a) (vi) and 5 (c), Sch. 1, Stamp Act but also under Article 35 (c) which involved an extra duty of Rs. 24,937.8.0.
3. On 27th June 1931, the Collector formally adjudicated that this further duty of Rs. 24,937-8-0 was payable. The applicants not being content with that and having been advised that the deed was properly stamped they, on 5th August 1931 submitted the opinion to the Collector who however held that as he had made the adjudication he had no power to reconsider it. On 10th August 1931 the applicants appealed to the Board of Revenue as being the Chief Revenue authority requesting if necessary that the matter might be referred to the High Court. On 31st October 1931 the applicants were informed by the Collector that the Board of Revenue had upheld the Collector's decision and accordingly on 20th January 1932 the applicants requested the Board to refer the case to the High Court under Section 57, Stamp Act. On 15th February 1931 the Board replied however that the question of a reference was under consideration in connection with a similar case and that it would reply further as soon as the decision had been arrived at in that case. On 23rd March 1932 the Board stated to the applicants that as the adjudication by the Collector was made under Section 31 Stamp Act it was final by reason of the provisions of Section 32 and therefore the Board was not in a position to refer the ease to the High Court. It is not necessary for the purposes of the present proceedings that I should express any opinion as to whether or not that view of the matter was correct. But in passing I am bound to say that it seems a little difficult to extract from the provisions of Section 32 anything which indicates that an adjudication under Section 31 is necessarily in all cases and for all purposes final.
4. It appears that the appellants did not pay the substantial sum demanded by way of extra duty and so on 16th August 1932 the Collector wrote that the only course left open to him was to impound the deed under Section 33 and to proceed to realise the duty and penalty under the provisions of Section 48 Stamp Act. Thereupon the applicants on 25th August 1932 pointed out to the Collector that as he proposed to act inter alia under the provisions of Section 40 Stamp Act be had then an opportunity of drawing up a case and referring it for the decision of the Board under the provisions of Section 56 (2) and the applicants requested the Collector to take that course. On 29th August 1932 the applicants reinforced their arguments by forwarding to the Collector a further legal opinion which they had obtained. Nevertheless on 1st September 1932 the Collector replied refusing to make a reference under Section 56 (2) and stating that, unless payment was made by 15th September 1932, he would impound the document and take action under Section 40. On the 6th of the same month the Collector, apparently after perusing the opinion which had been sent to him, confirmed his refusal to make a reference. Thereupon, on 13th September 1932, the applicants petitioned the Board of Revenue to exercise control over the Collector under the provisions of Section 56, and to state a case to the High Court under Section 57. Three days later the Collector made an order impounding the document, and directing that the additional stamp duty together with an equal sum, by way of penalty, should be realised from the applicants. The Collector duly informed the applicants that the document had been impounded and formally demanded payment of the amount of duty adjudicated and the penalty. On 29th October, the Collector, wrote to the applicants asking for payment and stating that the Board had rejected the application for reference to the High Court. Thereupon the applicants came before this Court, and on 24th March 1933 obtained from Lord-Williams, J., an order, in the nature of a Rule, calling upon the Board to show cause why the Member of the Board of Revenue should not state a case, with his opinion, on the question of the proper stamp duty chargeable on the deed. This order was served on 4th April 1933. The matter was mentioned to the Court, on 10th April and an order was made that the matter should stand out of the list until 22nd May 1933. On that date, no cause having been shown, the Rule issued on 24th March 1933, was made absolute and the Board of Revenue was required to state a case by 3rd July 1933. On 27th June the case was filed by the Board of Revenue, and on 25th July a supplementary case was filed by the Board.
5. The learned Advocate General appearing before us for the Board of Revenue was at first disposed to argue, on the authority of the decision in the case of In re Cooke and Kelvey, 1932 Cal 736 (this was the matter referred to in the letter of the Board of Revenue to the applicant, dated 15th February 1932), that the present proceedings were not competent, apparently on the footing that a mare adjudication cannot be challenged so as to enable proceedings in review of such adjudication to be filed. Again, it seems to me a little difficult to understand the basis of any such contention seeing that although Section 56(1) refers to 'powers exercisable by the Collector under Ch. 4 and Ch. 5 and under clause of the first proviso to Section 26,' in Sub-section (2) of Section 56, action under Section 31 is mentioned. Section 31 is in Ch. 3, not in Ch. 4, or Ch. 5. However the point is of no importance in the present case, because directly it was brought to the attention of the learned Advocate-General, by counsel for the applicants, that the Collector had, in fact, taken action under Section 40; he frankly conceded that the present proceedings are quite in order. What we have now to decide therefore is whether or not the Collector and the Board of Revenue were right in holding that the sum of rupess 16,62,500 is in the nature of a premium for the lease granted by the Indenture of 5th March 1931. It is to be borne in mind that the word 'premium' is not defined in the Stamp Act, but in Section 105, T. P. Act, 1882, it is described as 'a price paid or promised' for the transfer of a right to enjoy an immovable property for a certain time, express or implied.
6. In popular parlance in England, at any rate,, the expression 'premium' is more often used to denote a consideration passing between a lessee and his assignee, rather than consideration passing from a lessee to a lessor. Moreover even when it is used in the latter sense it would, generally speaking, mean something over and above the consideration, for the lease, which is given in the form of a rent. It is a little remarkable that Section 105, T. P. Act, looked at strictly, would seem to contemplate that a consideration for a lease must be either ' a price paid or promised' or money, share of services or any other thing of value rendered periodically on a specified occasion. The former is called a 'premium' and the latter is called 'rent.' Construed literally, it would appear that it was not within the contemplation of Section 105 that there should ever be both a premium and a rent. I think we must assume however that even so, it is possible for the consideration for a lease to take the form partly of a price paid and partly of rent. The view taken by the Board of Revenue, and contended for by the learned Advocate. General before us is this: that from the document itself, it would appear that the demise to the company was in consideration of all the rent and covenants reserved and contained in the document, and on the part of the company to be paid and observed. The Board of Revenue, in their statement of 25th July, pointed out that in addition to the covenants to pay an annual rent of Rs. 3,000 and to pay the Municipal rates, taxes, etc., the company covenanted to take over as from 1st April 1930 the liability of the Board to pay the Government of the United Provinces of Agra and Oudh, the 35 half-yearly instalments of Rs. 47,500 aggregating Rs. 16,62,500. The covenant to take over the liability of the lessor to the Government was, so it was contended, clearly a part of the consideration for the lease and therefore the Collector was right in treating the amount payable to the Government as a price promised to be paid for the lease, i.e., a premium as defined in Section 105, T. P. Act. It is the fact that by the indenture the Board did demise to the company the subject matter of the lease described as follows:
All that piece or parcel of revenue free land situated in mahalla Aishbagh, in thana Chowk in the city of Lucknow, consisting of 7 bighas 6 biswas 10 biswansls 10 kachwan or there abouts as more particularly delineated on the plan annexed hereto, and therein surrounded by a red verge line, together with the Electric Generating Station thereon, or on part thereof, erected and all other buildings, sheds and erections upon the said land, shown in yellow in the said plan, and secondly, all and singular the plant machinery and all other fixtures and fittings and other cables and pipes, now being in or upon and attached or belonging to the said Electric Generating Station buildings, and premises, together with all ways, passages, lights, drains, rights, easements and appurtenances to the said premises or any of them belonging or therewith usually held or enjoyed, but excepting and reserving out of this present demise, to the Board, the water pipes and their fittings and the weighbridge now being upon part of the demised land, which weighbridge the Board shall forthwith remove making good all damage thereby caused.
7. These covenants are set forth in para, 2 of the document. No doubt it may be said that the whole of the moneys which were to be paid by the applicants was the consideration granted for the lease either in the form of a price or in the form of rent. But in Clause (3), para. 2, it was provided in effect that if and when the applicants should have paid 35 half-yearly instalments of Rs. 47,500 that is to say on the payment of the balance of the apportioned loan, and the interest that accrued thereon, then the Electric Generating Station and the premises demised under the lease other than the land would be and would remain thenceforth the absolute property of the applicants to be dealt with and disposed of by them as they might think it. It is on the strength of these provisions that it was contended for the applicants that the payment of the sum of Rs. 16,62,500 was not in the nature of a price paid (or premium) for the granting of the lease but was a price to be paid for the acquisition by the company of the Electric Generating Station and the plant and machinery and other fixtures and fittings attached or belonging to the Electric Generating Station.
8. In support of this view of the matter, it was pointed out to us that there is no proviso for re-entry and that even if the applicants failed to discharge the obligation, they had entered into to pay the half-yearly instalments of Rs. 47,500 for the period of 174 years, the Board, as lessor, could not eject them and the applicants would still be entitled to enjoy all the property comprised in the demise in exchange of the payment of the bare rent of rupees 3,000 per annum. It would appear, from the terms of the lease, that the subject matter of the lease, other than the land itself, would not become the property of the applicants, unless and until they had completely paid the sum of Rs. 16,62,500. But having regard to the terms of the lease it seems quite a possible interpretation to put upon it that the annual payment of Rs. 3,000 was rent for the land demised and the other sum-the large sum to be paid- was in the nature of the purchase price for the rest of the subject matter of the demise. But having regard to the fact that even if the applicants failed to maintain payment of a half-yearly instalment of Rs. 47,500, they would still be in the position of enjoying not only the land but the whole of the subject matter of the demise for the comparatively small payment of Rs. 3,000 per annum, a more reasonable course might be to endeavour to make an apportionment so as to ascertain what part of the total sum of Rs. 16,62,500 ought to be regarded as being in the nature of a price paid for the demise of the subject matter of the lease other than the land, and therefore under the definition, as contained in Section 105, T. P. Act, a premium to that extent.
9. No doubt it would be possible, and even practicable, to arrive at some kind of apportionment of the total sum of Rs. 16,62,500 and to treat it as being partly the price of the demise of the subject matter of the lease, other than the land, and partly the price of the acquisition of the property in such subject matter upon payment by the applicants of the total amount of that sum. This apportionment might be done on some such basis as this: An estimate could be made by a competent surveyor, or other expert in such matters as to what would be a fair and economic return to the Board for the leasing of the whole of the subject matter of the lease for a period of thirty-four years and one hundred and seventy days, either in the form of 'premium' or of rent alone or a combination of both. The capital value of such return could then be compared with the total amount actually to be paid by the applicants under the lease, that is to say, the sum of Rs. 16,62,500 plus the total of the rent at Rs. 3,000 per annum for thirty four years and one hundred and seventy days. The difference between these two sums might not unreasonably be taken to be the price payable for the ultimate acquisition of the property in the Electric Generating Station, plant machinery, etc. Looking at the matter from that angle, it might be possible to arrive at some sort of opinion as to whether or not the sum of Rs. 16,62,500 was wholly premium, or partly premium and partly price for sale of immovable property in the nature of chattels real. I do not think it necessary that we should go into the matter to that extent however because the simple question which, in my opinion, we have to answer is whether or not the Collector and the Board of Revenue were correct in characterising the whole sum of rupees 16,62,500 as a premium for the lease. In my opinion upon a careful scrutiny of the terms of the indenture concerned, and in particular, having regard to the fact that at the end of the period of 1 years the applicants, if they keep up payment of the instalments, will have acquired the absolute property in the Electric Generating Station and the other buildings sheds and erections on the land together with all plant, machinery and other fixtures and fittings now attached or be longing to the Electric Generating Station, we ought to hold that the view of the Collector and the Board of Re venue was not correct, and that the stamp duty chargeable in respect to the instrument of 5th March 1931, is as contended for by the applicants.
10. I agree.
Buckland, Ag. C. J.
11. I have very little to add to the judgment of my learned brother. The question to be determined is whether the sum of Rs. 16,62,500 to be paid under Clause 3 of the document is a fine or premium for which the lease was granted, to quota the words of Article 35(c), Stamp Act, or, in the words of the Transfer of Property Act, defining a premium, 'a price paid or promised' in consideration of the lease. Reliance is placed on behalf of the Grown upon the words 'that in .... consideration of the....... covenants hereinafter reserved and contained.' etc., as meaning that in consideration of the covenant to pay the sum in question, the demise was granted. I do not stress too heavily the point that the words quoted are common form and that for their true meaning and effect the covenants themselves must be examined though I know of no reason why a lease should not be granted in consideration of a covenant on the part of a lessee, whereby he agrees to pay a sum of money in return for goods supplied or to be supplied or services rendered or to be rendered. In such circumstances, if the agreement between the parties were properly stated, there could be no question of the money being paid as the price or premium for the lease itself, though a covenant to make such payment, in return for something other than the lease, might well be one of the covenants it consideration of which the lease was granted.
12. Turning to Clause 3 of the document I find it impossible to avoid the conclusion that the sum of Rs. 16,62,500 is referable to anything but the price of the plant, machinery and Electric Generating Station. There is nothing to show that any portion of it is referable to the lease of the land at Rs. 3,000 per annum which may or may not be a fair annual value of the land itself and no question of apportionment between the two arises. The only contention put forward on behalf of the Crown is that this payment was to be made by way of premium, or price, for the lease, but as I do not take this view and it has not been argued that the document is not otherwise sufficiently stamped I agree with my learned brother's conclusions.