HANUMAN VITAMIN FOODS PVT. LTD. AND ORS.versusTHE STATE OF MAHARASHTRA AND ANR.

         HANUMAN VITAMIN FOODS PVT. LTD. AND ORS.                                 A
                                       v.
             THE STATE OF MAHARASHTRA AND ANR.

                               JULY 20, 2000

                  [M.B. SHAH AND S.N. VARIAVA, JJ.]                               B


      Bombay Stamp Act, 1958: Schedule I-Article 25(b)(i) Co-operative
Society-Share transfer-Instrument of-Instrument of transfer amounting to
conveyance of property-Held such an instrument liable to stamp duty under         C
Article 25 (b) (i).

      Constitution of India, 1950

      Seventh Schedule-list /-Entry 91-List II-Entry 63-Co-operative
Society-Share-Transfer of-Transfer instrument conveying property-Levy             D
of Stamp Duty-Legislative competence of State Legislature.

      The appellant, a member of a co-operative society, was in occupation of
an office premises in a building at Bombay. By an instrument dated 31st
March, 1986 it transferred five shares in the co-operative society in favour
of other appellants for a consideration of Rs. 9,46,900. The Superintendent       E
of Stamps held that the document executed by the appellant was a conveyance
of property and thus chargeable with Stamp Duty under Article 25 (b) (i) of
the Bombay Stamp Act, 1958. A writ petition filed by the appellant was
dismissed by the Bombay High Court holding that the instrument of transfer
amounted to conveyance of property and was chargeable with stamp duty under
Article 2S(b) (i). The High Court also rejected the contention of the appellant   F
that levy of stamp duty on transfer of shares was beyond the legislative
competence of the State Legislature.

      Against he decision of High Court an appeal was preferred before this
Court. A writ petition under Article 32 was also filed. In both the matters the   G
questions which arose for consideration were:

      (a) Whether transfer of shares in a co-operative Society is subject to
levy of stamp duty under the Bombay Stamp Act, 1958? and

      (b) Whether the State legislature has legislative competence to levy        H
                                     623
    624                     SUPREME COURT REPORTS [2000] SUPP. I S.C.R.

A stamp duty on transfer of shares?
          Dismissing the Civil Appeal as well as the Writ Petition, the Court

         HELD: The stamp duty is sought to be levied under Article 25, Schedule
  I of the Bombay Stamp Act. It is being levied not on transfer ofshares but on
B the basis that the agreement is a conveyance. There is no dispute that there
  is legislative competence illl the State Government to levy stamp duty on a
  conveyance of property. In view of the fact that such an instrument is not an
  instrument of transfer of shares, but it is, in fact a conveyance, the second
  question regarding legislative competance no longer survives. [626-F-G)
c         Veena Hasmukh Jain and Another v. State of Maharashtra and Ors.,
    (199915 SCC 725, relied OD:

          CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3707 of 1990.

D        From the Judgment and Order dated 16/17.2.89 of the Bombay High
    Court in W.P. No. 1820of1986.

                                        WITH
          Writ Petition (C) No. 379of1995
E
          (Under Article 32 of the Constitution of India.)

         Krishan Mahajan, Ms. MusharaffChoudhry, R.F. Nariman, P.H. Parekh
    and Sunil Dogra for the Appellants.

F         Ashok Kumar' Gupta for the Petitioners.

          S.B. Wad, S.V. Deshpande and A.S. Bhasme for the Respondents.

          The Judgments of the Court was delivered by

G          S.N. VARIA VA, J. This Civil Appeal is against the Judgment dated 16/
    17th February, 1989. The questions raised in this Appeal are:- (ai whether
    transfer of shares in a Co-operative Society is subject to levy of stamp duty
    under the Bombay Stamp Act, 1958 and (b) whether the State Legislature has
    legislative competence to levy stamp duty on transfer of shares.

H         Briefly stated the facts are as follows:
         HANUMAN VITAMIN FOOD PVT. LTD. v. STATE [S.N. VARIAVA, J.) 625

I         The Ist Appellant was a member of Dalamal Tower Promises Co- operative     A
    Society Ltd. As such member the !st Appellant was the holder of 5 shares
    each bearing distinctive Nos. 711 to 715. As such member the I st Appellant
    was in occupation of office premises No. 904 on the 9th floor of the building
,   known as Dalamal Tower situated at 211, Nariman Point, Bombay 400 021. By
    an Instrument dated 31st March, 1986 the I st Appellant transferred in favour
    of Appellants Nos. 2, 3, 4, 5 and 6 the said 5 shares for a consideration of     B
    Rs. 9,46,900/-. The said Instrument of Transfer, inter alia, set out that the
    Dalamal Tower Premises Co-operative Society Ltd. was the owner of the
    building Dalamal Tower; that the !st Appellant was a member of the said
    society holding the said 5 shares; that one of the incidents of membership
    was that the member had a right to occupy specific Office premises in the        C
    building Dalamal Tower and as such the !st Appellant had a right to occupy
    premises No. 904 on the 9th floor of the Dalamal Tower, which Office premises
    admeasured 557 Sq. ft. of built up area. The Instrument went on to state that
    for a consideration of Rs. 9,46,900 paid by the transferees to the transferor,
    the transferor transferred the said 5 shares to the transferees and that the
    transferees accepted the said shares.                                            D

           By a letter dated 23rd April, 1986 the Advocates of the I st Appellant
    forwarded the instrument of transfer to the Superintendent of Stamps for
    adjudication under the provisions of Bombay Stamp Act, 1958. In the said
    letter the Advocates stated that, in their opinion, the instrument of transfer   E
    was wholly exempted from duty, but that it was sent for adjudication by way
    of abundant caution. By a reply dated 22nd May, 1986 the Superintendent of
    Stamps informed the Advocates for the Ist Appellant that the document for
    adjudication was a conveyance of property chargeable with stamp duty under
    Aiticle 25(b)(i) of the Bombay Stamp Act on the present market value of the
    said property. By the said Letter the Superintendent of Stamps requested for     F
    details regarding premises No. 904 in Dalamal Tower and also called for a
    valuation report and other relevant documents.

          The Appellants, therefore, filed Writ Petition 1820 of 1986 in the High
    Court of Judicature at Bombay to have the said letter quashed. They also         G
    sought directions against the Superintendent of Stamps and the State of
    Maharashtra to desist and forbear from charging, demanding or recovering
    stamp duty on the said form of Transfer of shares, or from proceeding on the
    basis that the form of Transfer of shares was not duly stamped and, thus,
    liable to be impounded. The Appellants contended that the instrument of
    transfer was a document transferring the shares held in a body corporate and     H
    626                     SUPREME COURT REPORTS [2000) SUPP. I S.C.R.

A was_ thus not within the purview of the Bombay Stamp Act, 1958. They also
    contended that the levy of stamp duty on transfer of shares in a co-operative
    society fell exclusively within Entry 91 of List I of the Seventh Schedule to
    the Constitution of India. The Appellants contended that it was beyond the
    legislative competence of the State as it did not fall within Entry No. 63 of
    List II of the Seventh Schedule to the Constitution of India.
B
           By the impugned Judgment dated 16/17th February, 1989, the Petition
    was dismissed on the ground that the instrument of transfer amounted to a
    conveyance of property and was chargeable with stamp duty under Article
    25(b )(i) of the Bombay Stamp Act, 1958. By the said Judgment the argument
C   regarding lack of legislative competence was also rejected.

           The question whether or not a transfer of shares in a Co-operative
    Society is subject to levy of stamp duty on the basis that it is a conveyance
    has already been answered by this Court in the case of Veena Hasmukh Jain
    and Another v. State of Maharashtra and Ors., reported in [1999] 5 SCC 725.
D   In this case it has already been held that such agreements would be covered
    by Article 25 of the Bombay Stamp Act, 1958. It is held that stamp duty would
    be leviable as if it is a conveyance. This Court has held that these are in effect
    agreements to sell immovable property as the possession of such property
    is transferred· to the purchaser before or at the time of or subsequent to the
    execution of the agreement. It is held such an agreement to sell must be
E   deemed to be a Conveyance. It is fairly conceded that this Judgment fully
    covers question (a) set out hereinabove.
                                                                                         ,
          As question (a) is already answered by the above mentioned Judgment
    in Veena 's case, in our view, question (b) does not survive. As seen above
F   stamp duty is sought to be levied under Article 25, Schedule I of the Bombay
    Stamp Act. The stamp duty is being levied not on transfer of shares but on
    the basis that the agreement is a conveyance. There is no dispute that there
    is legislative competence in the State Government to levy stamp duty on a
    conveyance of property. Question No. (b) has been raised on the footing that
    the instrument of transfer is a form of transfer of shares. Now that it is held
G   that such an instrument is not an instrument of transfer of shares, but it is,
    in fact, a conveyance question (b) no longer survives.

          In this view of the matter, the Appeal does not survive. The same
    stands dismissed. There will be no order as to costs.

H         S.N. VARIA VA, J. All the Petitioners are nationals and citizens of India.
      HANUMAN VITAMIN FOOD PVT. LTD. v. STATE [S.N. VARIAVA, J.]           627
    They are all residents of Bombay. By this Petition, under Article 32 of the A
    Constitu!ion of India, the Petitioners seek to challenge levy of stamp duty on
    a transfer of shares in a Co-operative Housing Society on the basis that such
    agreements are conveyances. It is contended by the Petitioners that the State
    Legislature has no competence to levy stamp duty on transfer of shares in
    a Housing Co-operative Society, where the transferee, as an incident of
    membership, is entitled to the use and occupation of the premises belonging B
    to the co-operative society. The Petitioners point out that this question is
    already pending in Civil Appeal No. 3707 of 1990 before this Court. Thus, the
    questions raised in this Petition are identical to those raised in Civil Appeal
    No. 3707 of 1990, viz., (a) whether the transfer of shares in the Co-operative
    Society is subject to levy of stamp duty under the Bombay Stamp Act, 1958 C
    and (b) whether the State Legislature has legislative competence to levy
    stamp duty on a transfer of shares.

           By a Judgment passed today in Civil Appeal No. 3707 of 1990, that
    Civil Appeal stands dismissed. For the reasons set out therein, this Writ
    Petition also stands dismissed.                                               D
    T.N.A.                                          Appeal/Petition dismissed .




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