Holding

The supplementary agreement, being a mere amendment of the original lease without alteration of its essential terms, does not amount to a fresh transfer; hence stamp duty is payable only under Article 5(f)(i), not Article 5(d).

Issues considered

Whether the supplementary agreement effected by the change of the lessee’s name and purpose constitutes a fresh transfer attracting stamp duty under Article 5(d) of the Karnataka Stamp Act, 1957.
Whether stamp duty is payable only under Article 5(f)(i) of the Schedule to the Karnataka Stamp Act in such circumstances.

Legislation cited

Companies Act, 1956s. 23, s. 2(l)
Karnataka Stamp Act, 1957s. 2(i), s. 39, s. 5(d), s. 5(f)(i)
Transfer of Property Act, 1882s. 105, s. 54

Subjects

stamp dutysupplementary agreementlease amendmenttransfer of propertychange of company nameKarnataka Stamp ActSection 105Article 5(d)Article 5(f)(i)rectification

Judgment

A PRASAD TECHNOLOGY PARK PVT. LTD.
II.

SUB-REGISTRAR AND ORS.
!II
DECEMBER 8, 2005 .,
B [S.B. SINHA AND P.K. BALASUBRAMANYAN, JJ.]

Karnataka Stamp Act, 1957-Section 2(1)0); Articles 5(d), 5(/)(i) of
the schedule appended thereto-Change in the name of lessee company-
Period of lease, quantum of premium paid and other terms remaining .t-
.,._
c unaltered-Document seeking substitution of changed name in the original
lease deed-Liability to pay stamp duty-Held: Stamp duty on such document
would not be payable on the original lease amount as no fresh transaction
had taken place-Stamp duty payable in terms of Article 5(/)(i) and not
Article 5(d)-Transfer of Property Act, 1882-Sections 105, 54.
D 1·

The earlier name of the appellant-Company was P Garment Pvt. Ltd. It
had been engaged in the manufacture of garments. It entered into lease
agreement of land with the third respondent. Subsequently, P Garment was
permitted to establish a software park. It changed.its name to P Technology
Park. On account of change of name, a supplementary agreement was r
~

E executed. Appellant presented the said agreement for registration on stamp
duty of Rs. 100. Registrar was of the opinion that the stamp duty was
insuflkient and was payable on the original lease amount. Aggrieved Appellant
filed Writ Petition before the High Court, which was dismissed. Writ Appeal {
also stood dismissed. "Hence the present appeal.
F
Allowing the appeal, the Court

HELD: 1. By reason of the supplementary agreement, the Appellant was
permitted to carry on the ~usiness of a Technology Park instead of
manufacture of readymade garments. Only because the name of the company
G was changed, the same would not mean that a fresh transaction took place.
r
Having regard to the change in the name of the company, the Appellant's name I
was sought to be substituted in the original agreement. The period of the lease,
the quantum of the premium paid and other terms and conditions remained
unaltered. By reason of mere change of user from carrying on one business

H 642
PRASAD TECHNOLOGY PARK PVT. LTD. v. SUB-REGISTRAR 643

to another, a fresh transaction does not take place. The terms and conditions A
of the lease can be changed by mutual consent. Unless the essential ingredients
thereof as contained in Section 105 of the Transfer of Property Act are not
altered, it cannot be said that the parties to the contract entered into a fresh
transaction. The Third Respondent merely reserved unto itself a right of
reentry on expiry of the said period of eleven years. It could in terms of the
covenant of the lease also extend the period of tenancy or terminate the same. B
Unless the lease itself came to an end, the third respondent did not have any
right to re-convey the property. By reason of mere change in the name of the
company" P Garments Pvt Ltd." the erstwhile lessee also cannot be held to
have transferred its leasehold interest in favour of the Appellant
(647-F-H; 648-A-CJ C
2. Execution of an instrument which would attract payment of stamp duty
in terms of Article S(d) of the Kamataka Stamp Act, 1957 must involve transfer
of the property or otherwise a right or liability may inter alia be created,
transferred etc., as envisaged in Section 3 thereof. Once it is held that the
supplementary agreement is neither a deed of lease nor a deed of sale within D
the meaning of Section 105 or Section 54 of the Transfer of Property Act, as
the case may be, Article 5(d) of the Schedule to the Act will have no
application. If Article S(d) has no application, indisputably the residuary clause
contained in Article S(t)(i) would have. The Appellant admittedly paid the stamp
.. duty in terms thereof. (648-D-FJ
E
3. It is now well settled that for the purpose of levy of stamp duty, the
real and true meaning of.the instrument must be ascertained.

The Madras Refineries Ltd. v. The Chief Controlling Revenue Authority,
Board of Revenue, Madras (1977) 2 SCC 308, relied on.
4. The lligh Court held that 'the supplementary lease agreement cannot F
be said to be an instrument whereunder the Appellant-Company claims certain
leasehold from the Board'; but having did so, the High Court was not correct
in holding that it is liable to pay the stamp duty. Having regard to the fact that
the entity of the Appellant cannot be said to be totally different from P

- Garments Pvt Ltd. and as by reason of the supplementary agreement, no fresh
transaction has been entered into, the impugned judgment cannot be sustained.
(648-G; 649-AI
G

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7305of2005.

From the Judgment and Order dated 10.3.2004 of the Karnataka High H
644 SUPREME COURT REPORTS [2005] SUPP. 5 S.C.R.

A Court in W.A. No. 8087 of2003 (GM-ST/RN).
S.K. Kulkarni, G. Gireesh Kumar and Vijay Kumar for the Appellant.

Ms. Kiran Suri, Sanjay R. Hegde, Anil K. Mishra, A. Rohen Singh and
Ms. Kirti Mishra for the Respondents.
B
The Judgment of the Court was delivered by

S.B. SINHA, J. Leave granted.

Whether execution of a supplementary agreement entered into by and
C between the Appellant and the Third Respondent herein would amount to a
t~ansfer so as to attract stamp duty payable in terms of Article 5(d) of the
Schedule appended to the Karnataka Stamp Act, 1957, consequent upon the
change of t_he name of the erstwhile company to the Appellant Company is
the question involved in this appeal.

D The basic fact of the matter is not in dispute. One "Prasad Garments
Pvt. Ltd." was a company registered under the Companies Act, 1956. On or
about 05.03 .1999, it entered into a lease-cum-sale agreement with the Third
Respondent herein upon payment of premium of a sum of Rs.14,49,453, which

E
amounted to 99% of the tentative cost of the land and one yearly rent of966/
- for a period of eleven years computed from 25.06.1997. The name of the said
.
"

company, however, was changed to "Prasad Technology Park Pvt. Ltd."

The Appellant presented the said instrument for registration before the .
First Respondent herein on a stamp paper of Rs. I 00/-. The First Respondent,
however, was of the opinion that the stalilp duty on the total amount of the
F original lease deed as mentioned in the lease deed dated 05.03.1999 was
required to be paid. In response to a notice served in this behalf on the
Appellant, a show cause was filed contenting that the supplementary agreement
is n:ierely a deed of rectification. The said contention was, however, rejected .
by the Deputy Commissioner of Stamps by an order dated 26.10.2000, holding:
G "As per the above said amendment, the original document, sinc;e
the changes in the legal effect of the instrument and hence the
Supplementary agreement document in question subjected to the entire
material alteration. In this regard, it held in the similar cases in AIR
-
1939 Cal. 181, AIR 1936 Rang. 136, 50 L W 746 ( 1939) 2 MLJ 683, the
H honourable courts held (recorded in the Krishnamurthy's Indian Stamp
PRASAD TECHNOLOGY PARK PVT.LTD. v. SUB-REGISTRAR (SINHA, J.] 645

Act, or VII Edition's page 133 in Note 9). Therefore, in the present A
"Amendment or Supplementary Agreement", it is opined that the
Fixed Deposit and annual rent as per Appendix 5(d), it is required to
pay entire stamp fee. Hence, the following order :

ORDER
B
No.DR.1/47/00-01 Dated 26.10.2000

Taken into consideration of all the above said points, I the Deputy
Commissioner of Stamps, exercising my power vested under Section
39 of the Kamataka Stamps Act, 1957, the present Document of
"Supplementary Agreement" vide P.24/2000-01 dated 5.3.99 original C
document of Lease-cum-Sale Agreement mentioned Fixed Deposit of
Rs.14,49,593.00 and Annual rent ofRs.966-00 totaling to Rs.14,50,559.00
as per the Appendix 5(d) has to pay Stamp fee ofRs. l,45, 100.00 along
with fine ofRs.5.00, totaling to Rs.1,45, 105.00 hereby directed to make
payment."
D
Aggrieved by and dissatisfied therewith, a writ petition was filed by the
Appellant before the Karnataka High Court, which came to be dismissed by
reason of an order dated 11.08.2003 passed by a learned Single Judge opining:

" ... But unfortunately for the petitioner the supplementary agreement E
sought to be registered as entered into between the 3rd respondent
Lessor and the petitioner Lessee with the terms of the lease being the

-
same as had been in the earlier lease deed that had come to be
executed in favour of the petitioner-company in its earlier name as
evidenced by the agreement dated 5th March 1999. These tenns are
sought to be incorporated into the subsequent agreement which is F
known as supplementary agreement dated 24th April, 2000"

The Appellant herein preferred an intra court appeal there-against, which
was also dismissed by the impugned judgment, stating :

"In the instant case, earlier the name of the appellant-Compa~y G
was Prasad Garments Pvt. Ltd., which is now changed to Prasad
Technology Park Pvt. Ltd. On account of change of name of the
Company, a supplementary agreement was entered into between the
M/s Kamataka Industrial Areas Development Board and the appellant-

• Company. So far as the argument of non-payment of stamp duty is H
646 SUPREME COURT REPORTS [2005] SUPP. 5 S.C.R.

A concerned, the same is not acceptable. It cannot be said that the
supplementary lease agreement is also an instrument under which the
appellant-Company claims certain leasehold rights from the Board,
and therefore, it is liable to pay the stamp duty and cannot escape
payment of stamp duty. The learned Single Judge having found no
illegality in the order of the 2nd respondent, considering the material
B on record and case laws relied on, by a detailed order, has dismissed
the writ petition.

In our view, the appellant-Company cannot escape its liability to
pay the stamp duty under the supplementary agreement since there
is transfer of interest in the Company, which the appellant-Company
c can claim under the 3rd respondent...."

Mr. S.K. Kulkarni, the learned counsel appearing on behalf of the
Appellant, at the outset, drew our attention to the definition of instrument as
contained in Section 2(l)U) of the Kamataka Stamp Act, 1957 and would
D submit that having regard to the fact that no element of transfer was involved
in execution of the said supplementary agreement, Article 5(t)(i) of the Appendix
appended thereto would be attracted and not Article 5(d) thereof as has been
held by the Deputy Commissioner of Stamps.

Mr. Sanjay R. Hegde, the learned counsel appearing on behalf of the
E First and Second Respondents, on the other hand, would submit that having
regard to the fact that the nature of business of the company was also altered
inasmuch.as whereas by the earlier instrument the demise of the premises was
made only for the purpose of manufacture of readymade garments and leather
garments, the lessee now has been permitted to establish a software park; the
F instrument in question must be held to be one of lease. Our attention, in this
behalf, has been drawn to clauses 2(n) and 2( q) of the original deed of lease,
which are as under :

"2(n) To use the demised premises only for the purpose of
Manufacture of Ready Made Garments or Leather Garments factory/
G industry and not to use the dem~sed premises or any part thereof for
any other purpose nor for the purposes of any factory which may be
obnoxious, or offensive by reason of emission of odour, liquid
'effluvia', dust, smoke, gas, noise vibrations or fire hazards.

2(q) The Lessee shall not alienate the demised premises or any
H part thereof or the building, that may be constructed thereon during
PRASAD TECHNOLOGY PARK PVT. LTD. v. SUB-REGISTRAR [SINHA, J .] 647
the period of lease. The Lessee may mortgage the right, title and A
interest in the demised premises in favour the Government ofKamataka
or the Central Government or Corporate bodies like Life Insurance
Corporation of India, Karnataka State Industrial Investment and
Development Corporation, Karnataka State Financial Corporation,
Industrial Finance Corporation of India, Industrial Development Bank
of India, Industrial Credit and Investment Corporation of India, .Unit B
Trust of India, Trustees of Debenture Stock of Banks to secure moneys
advanced by such Government or bodies for the erection of building,
plant and machinery. However, the Lessee shall obtain the No Objection
Certificate from the Lessor in writing for creation of second and
subsequent charges." C
Change of the name of a company can be allowed by the Registrar of
the Companies in tenns of Section 2 l of the Companies Act. Once such a
name is pennitted to be changed, a certificate is issued· in terms of Section
23 thereof.
D
The Appellant indisputably was permitted by the Third Respondent
herein to establish a software park. The execution of supplementary agreement,
it has categorically been stated, became necessary consequent upon the
change in the name of the company. By reason of such supplementary
agreement although it was permitted to establish a software park but by
reason thereof no fresh transaction was entered into. We have noticed E
hereinbefore that in terms of the aforementioned agreement dated 05:03.1999,
the land in question was demised for a period of eleven years with effect from
25.06.1997 on payment of premium fixed thereunder as also on yearly lease
rent stipulated thereby.

The said lease indisputably was governed by Section 105 of the Transfer
F
of Property Act. By reason of the supplementary agreement, a restrictive
covenant has been amended in tenns whereof the Appellant herein was
permitted to carry on the business ofa Technology Park instead of manufacture
of readymade garments/leather garments. Only because the name of the
company was changed, the same would not mean that a fresh transaction G
took place. Having regard to the change in the name of the company, the
Appellant's name was sought to be substituted in the original agreement. The
period of the lease, the quantum of the premium paid and other terms and

- conditions remained unaltered except the restriction contained in clause 2(q)
of the said deed, was removed. By reason of mere change of user from H
648 SUPREME COURT REPORTS [2005] SUPP. 5 S.C.R.

A carrying on one business to another, it is trite, a fresh transaction does not
take place. The terms and conditions of the lease can be changed by mutual
consent. Unless the essential ingredients thereof as contained in Section 105
of the Transfer of Property Act are not altered, it cannot be said that the
parties to the contract entered into a fresh transaction. The Third Respondent
merely reserved unto itself a right of reentry on expiry of the said period of
B eleven years. It could in terms of the covenant of the lease also extend the
period of tenancy or terminate the same. Unless the lease itself came to an
end, the third respondent did not have any right to re-convey the property.
By reason of mere change in the name of the company "Prasad Garments Pvt.
Ltd." the erstwhile lessee also cannot be held to have transferred its leasehold
C interest in favour of the Appellant herein.

Section 2(i)G) of the Act, defines 'instrument', to mean :

"2( I )(j) "Instrument" includes every document and record created or
maintained in or by an electronic storage and retrieval device or media
D by which any right or liability is, or purports to be, created, transferred,
limited, extended, extinguished or recorded;"

Execution of an instrument which would attract payment of stamp duty
in terms of Article 5(d) of the Act must involve transfer of the property or
otherwise a right or liability may inter alia be created, transferred etc., as
E envisaged in Section 3 thereof. Once it is held that the supplementary
agreement is neither a deed of lease nor a deed of sale within the meaning
of Section I 05 or Section 54 of the Transfer of Property Act, as the case may
be, Article 5(d) of the schedule to the Act will have no application. If Article
5(d) has no' application, indisputably the residuary clause contained in Article
F 5(f)(i) would have. The Appellant admittedly paid the stamp duty in terms
thereof.

It is now well settled that for the purpose of levy of stamp duty, the
real and true meaning of the instrument must be ascertained. [See The Madras
Refineries Ltd v. The Chief Controlling Revenue Authority, Board of Revenue,
G Madras [ 1977] 2 sec 308].

The High Court held that 'the supplementary lease agreement cannot
be said to be an instrument whereunder the Appellant-Company claims certain

-
leasehold from the Board'; but having did so, the High Court was not correct
in holding that it is liable to pay the stamp duty.
H
PRASAD TECHNOLOGY PARK PVT.LTD. v. SUB-REGISTRAR [SINHA, J.) 649

Having regard to the fact that the entity of the Appellant cannot be said A
to be totally different from Prasad Gannents Pvt. Ltd. and as by reason of the
supplementary agreement, no fresh transaction has been entered into, the
impugned judgment cannot be sustained, which is set aside accordingly. The
appeal is allowe& The Appellant shall be entitled to costs.

D.G. Appeal allowed.