Balaji Enterprises through Its Partner Navneet Kumar Pandey Vs the State of Jharkhand through Its Secretary Road Construction Department

W.P.(C) No.797 of 2018

IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P.(C) No.797 of 2018

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Balaji Enterprises (a registered Partnership firm), having its Office at 3/271, Vishwas Khand, Gomti Nagar, Lucknow, P.O. and P.S. Gomti Nagar, District Lucknow, Uttar Pradesh; through its Partner Navneet Kumar Pandey, aged about 32 years, son of Shri Vinay Kumar Pandey, resident of 3/271, Vishwas Khand, Gomti Nagar, Lucknow, P.O. and P.S. Gomti Nagar, District Lucknow, Uttar Pradesh

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… Petitioner

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Versus

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The State of Jharkhand, Through its Secretary, Road Construction Department, having its office at Project Building, Dhurwa, P.O. and P.S. Dhurwa, Ranchi 834004, District Ranchi.

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Engineer-in-Chief, Road Construction Department, having its office at Project Building, Dhurwa, P.O. and P.S. Dhurwa, Ranchi 834004, District Ranchi.

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Executive Engineer (Road Division) Road Construction Department having its office at Saraikella-Kharsawan, P.O. and P.S. Saraikella, District Saraikella- Kharsawan

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… Respondents

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For the Petitioner : Mr. Sumeet Gadodia, Advocate Mrs. Shilpi Shandil Gadodia, Advocate Ms. Shruti Shekhar, Advocate For the Respondents : Mr. Ravi Kerketta, SC VI

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P R E S E N T

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HON’BLE MR. JUSTICE ANIL KUMAR CHOUDHARY

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By the Court:- Heard the parties.

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This Writ Petition has been filed under Article 226 of the Constitution of

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India inter alia with a prayer for issuance of an appropriate writ/order/direction including Writ of Declaration declaring that the

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W.P.(C) No.797 of 2018

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agreement executed by and between the petitioner and the respondent No.3 dated 13.02.2016 pertaining to collection of User Fee in State Highways No.5 at Kandra Junction Toll Plaza at Adityapur-Kandra Section is not a ‘Lease’ within the meaning of Section 2 (16) (c) of the Indian Stamp Act, 1899 especially because the petitioner has only been appointed as an agent of the RespondentState of Jharkhand in the matter of collection of User Fee and Jharkhand Highways Fee (Determination of Rates and Collection) Rules, 2011. It is the executing authority which is entitled to collect user fee for use of any State Highway and the petitioner is merely appointed as an agent of the said executing authority for assisting the said executing authority in collection of User Fee and other consequential reliefs and further for quashing/setting aside the Letter dated 14.12.2017 issued by the Respondent No.3 which is Annexure11 of this writ petition; whereby and where under the petitioner has been directed to get its agreement dated 13.02.2016 registered in the office of the District Sub-Registrar, Saraikella after payment of stamp duty and registration fee and directed the respondent to release the bank guarantee dated 12.09.2017 submitted by the petitioner as security towards the amount of alleged stamp duty and registration fee allegedly required for registration of agreement dated 13.02.2016.

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The brief facts of the case is that the petitioner entered into an agreement with the respondent No.3 on 13.02.2016 whereby and where under the petitioner has been appointed as an agent of the respondent- State of Jharkhand for collection of User Fee in respect of State Highways No.5 in the State of Jharkhand at Kandra Junction Toll Plaza in Adityapur-Kandra Section. The petitioner contends that the same is not a ‘lease’ within the meaning of Section

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W.P.(C) No.797 of 2018

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2 (16) (c) of the Indian Stamp Act, 1899 and thus, is not required to be compulsorily registered on payment of Stamp Duty and Registration Fee in terms of Article 35 Schedule (I) of the Indian Stamp Act, 1899. It is contended by the petitioner that consequent upon amendment of the Indian Tolls Act, 1851 by virtue of the Indian Tolls (Jharkhand Amendment) Act, 2002, the respondent- State of Jharkhand has incorporated provision enabling itself to levy Fee for the use of State Highways. It is contended by the petitioner that Section 2A of the said act was introduced which enabled the State of Jharkhand to authorize any person to undertake development of roads and/or bridges pertaining to State Highways and to realize User Fee in respect thereof in lieu of such development activity undertaken by such person. The State of Jharkhand has formulated rules (Jharkhand Highway Fee Determination of Rates and Collection) laying down the procedure for collection of User Fee for use of any Section of Highways which define Executing Authority under Rule 2 (f) meaning thereby; an officer or authority subordinate to the Government notified by the State Government under Section 2 of the Indian Tolls (Jharkhand Amendment) Act, 2002. Rule 2 (r) defines User Fee meaning collection of prescribed fee from any person of various categories of mechanical vehicles for the use of State Highway, Major District Road, Other District Road Bridge, Interchange, Flyover, ROB/RUB, bypass and tunnel and the User Fee is also termed as fee/Toll/Toll fee. Rule 6 thereof provides for collection of User Fee is to be made either by the Government or the Executing Authority or an agent so appointed by the Executing Authority. Rule 6 (7) provides for collection of User Fee through Executing Authority either by its own official or through appointment of an agent.

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W.P.(C) No.797 of 2018

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The petitioner is a successful bidder in an E-tender voted by the Executive Authority to constitute in terms of the said Rule 2011. The letter of acceptance was issued to the petitioner identifying as an agent for collection of User Fee by the Road Construction Department. The petitioner further contended that the Clause 38 of the said agreement entered into between the petitioner and the respondent No.3 is general in nature but it has not contained any mandatory requirement for engrossing the agreement for the purpose of payment of stamp duty. The agreement of the petitioner came to an end on 12.06.2017. The petitioner filed a request letter dated 17.06.2017 for release of the performance security deposit by the petitioner in form of bank guarantee of Rs.83,34,000/-. After the contract period was over, the petitioner received a letter dated 11.07.2017 written by the respondent No.3 intimating therein that an audit objection has been raised by the office of the Principal Accountant General to the effect that the agreement executed by and between the petitioner and the respondent No.3 amounts to a lease of immovable property in terms of provisions of Section 2 (16) (c) of the Indian Stamp Act, 1899 and the said agreement was required to be duly registered after payment of stamp duty and registration fee and because of non-registration of the said agreement, a loss of Rs.30,00,000/- has been suffered by the State Exchequer. By another letter, the respondent No.3 directed the petitioner to get the said agreement executed by the petitioner and the respondent No.3 registered or else it was stated that the Bank Guarantee submitted by the petitioner would be encashed towards performance security. The respondent- State has released the performance security of the petitioner of Rs.83,34,000/- but the petitioner was directed to execute a separate Bank Guarantee for an amount of Rs.30,00,000/- in lieu of its

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W.P.(C) No.797 of 2018

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alleged liability towards stamp duty and registration fee and the petitioner having left with no option, executed Bank Guarantee in favour of respondent No.3- Executive Engineer for an amount of Rs.30,00,000/-. The petitioner next contended that in respect of public funded projects as provided for in Rules 2011, user fee is to be calculated by the Government or executing agency either through its own official or through its agent so appointed by it and the present agreement of the petitioner falls under that category. The petitioner agency is entitled to collect user fee, is neither given any charge and/or interest in the immovable property nor any right, title or interest over the immovable property even for a temporary period is vested upon the agent. The agent is only required to collect user fee on behalf of the State Government or the executing agency and has to remit the said user fee to the exchequer of the State Government. Hence, the said agreement does not come under the definition of lease under Section 2 (16) (c) of the Indian Stamp Act, 1899 unlike the case of private funded projects where concessionaire is granted the right of development, construction, reconstruction, repair, operation and maintenance of roads etc., and collection of user fee by the said concessionaire. The instrument concerned is to be duly stamped and registered. The petitioner next contends that the agreement entered into by and between the petitioner and the respondent No.3 is merely an agreement in the nature of a collection agency agreement wherein the relationship between the petitioner and the respondentState of Jharkhand is that of Principal and Agent and no right, title or interest over the property in question is vested upon the petitioner. Hence, the agreement cannot be termed to be a lease.

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W.P.(C) No.797 of 2018

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Learned counsel for the petitioner relies upon the judgment of the Hon’ble Supreme Court of India in the case of New Bus-Stand Shop Owners Association v. Corporation of Kozhikode & Another reported in (2009) 10 SCC 455 paragraphs-21 and 22 of which read as under:-

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“21. Relying on those two decisions of the Court of Appeal, this Court in Associated Hotels of India Ltd. v. R.N. Kapoor [AIR 1959 SC 1262 : (1960) 1 SCR 368] discussed this issue in very lucid terms. K. Subba Rao, J. who was in minority, discussed this question with a clarity which is often associated with His Lordship's opinion. The learned Judge referred to Section 105 of the Transfer of Property Act and then compared it with Section 52 of the Easements Act, 1882. After referring to those two sections and also after referring to the decision in Errington [(1952) 1 KB 290 : (1952) 1 All ER 149 (CA)] the learned Judge pointed out the distinction between the lease and the licence by expressly approving the tests laid down by Lord Denning and which may better be quoted: (Kapoor case [AIR 1959 SC 1262 : (1960) 1 SCR 368] , AIR pp. 1269-70, para 27)

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“27. … The following propositions may, therefore, be taken as well established: (1) to ascertain whether a document creates a licence or lease, the substance of the document must be preferred to the form; (2) the real test is the intention of the parties—whether they intended to create a lease or a licence; (3) if the document creates an interest in the property, it is a lease; but, if it only permits another to make use of the property, of which the legal possession continues with the owner, it is a licence; and (4) if under the document a party gets exclusive possession of the property, ‘prima facie’, he is considered to be a tenant; but circumstances may be established which negative the intention to create a lease.” (SCR pp. 384-85 of the Report)

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22. If we apply the aforesaid principles in the facts of the case in hand, we are bound to hold that the agreement between the parties merely falls under the category of licence as the licensee is never given the exclusive possession. The Corporation retained the exclusive possession of the shops and this is clear from the conditions of the licence discussed above.”

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and submits that therein the Hon’ble Supreme Court of India has laid down the principles regarding the difference between the lease and license and in the absence of any exclusive possession being given to the petitioner, at best the agreement can fall under the definition of license but the same cannot be

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W.P.(C) No.797 of 2018

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termed as lease. Hence, it is submitted that the prayer, as prayed for in this Writ Petition be allowed.

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Learned counsel for the respondent- State vehemently opposes to the prayer made by the petitioner in this Writ Petition. Learned counsel for the respondent State further draws the attention of this Court towards the counteraffidavit filed by it and submits that the agreement has all the ingredients of a lease as defined under Section 2 (16) (c) of the Indian Stamp Act. It is next submitted that the petitioner even does not dispute that the user fee comes within the ambit of the word ‘toll’. The agreement entered into by and between the between the parties is an instrument. It is next submitted that the very fact that the executing authority allowed the petitioner to collect the toll amounts to the word ‘let’ used in section 2 (16) (c) of the Stamp Act, hence, as all the ingredients of the said Section 2 (16) (c) is present in the agreement entered into by and between the parties, hence, stamp duty is receivable which is to be paid by the petitioner in terms of Clause 38 of the said agreement entered into by and between the petitioner and the respondent No.3. Hence, it is submitted that this Writ Petition, being without any merit, be dismissed.

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Having heard the rival submissions made at the Bar and after carefully going through the materials available in the record, it is pertinent to refer to Section 2 (16) (c) of the Indian Stamp Act, 1899 which reads as under:-

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(16) “Lease”. — “lease” means a lease of immovable property, and includes also—

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(a) xxxx; (b) xxxx;

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(c) any instrument by which tolls of any description are let; (d) xxx

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The word ‘let’ has been defined in Black’s Law Dictionary, 8^th Edition as

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‘to allow or permit’. In Oxford English Dictionary, the word ‘let’ has been

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W.P.(C) No.797 of 2018

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defined as ‘to allow somebody to do something. The word ‘toll’ has been defined in Oxford Advance Dictionary as the ‘money that you pay to use a road or bridge’.

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Now, coming to the facts of the case, to constitute a lease as defined under Section 2 (16) (c) of the Indian Stamp Act, 1899, the essential ingredients are

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(i) there must be an instrument;

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(ii) the instrument must be in respect of toll; and

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(iii) such instruments must be for letting the tolls.

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If we use the meaning of the word ‘let’ as to allow somebody to do something, an instrument becomes lease “if by an instrument an entity is allowed to collect toll. Such an arrangement will be termed as lease in terms of Section 2 (16) (c) of the Indian Stamp Act, 1899.

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Now, coming to the facts of the case, the undisputed fact remains that there is an agreement. There is no quarrel that the agreement is an instrument. The definition of user fee has been defined in the Jharkhand Highways Fee (Determination of Rates and Collection) Rules, 2011 which reads as under:-

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(r) “user fee” means collection of prescribed fee from any person of various categories of mechanical vehicles for the use of State highway, Major District Road, Other District Road bridge, Interchange, Flyover, ROB/RUB, bypass and tunnel. The user fee is also termed as fee/Toll/Toll fee. (Emphasis supplied)

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And the same in no uncertain manner lays down that the user fee is also

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termed inter alia as toll. So, if an agreement entered into by allowing somebody to collect toll, this Court has no hesitation in holding that the same will amount to a lease in terms of Section 2 (16) (c) of the Indian Stamp Act, 1899 and the

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agreement involved in this case being dated 13.02.2016 by and between the petitioner and the respondent No.3, has all the trappings of the Section 2 (16) (c) of the Indian Stamp Act, 1899 and the same amounts to a lease.

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So far as the judgment relied upon by the learned counsel for the petitioner in the case of New Bus-Stand Shop Owners Association v. Corporation of Kozhikode & Another (supra) is concerned, in which the distinction between the lease and license has been discussed by the Hon’ble Supreme Court of India, the same has no relevance to the facts of this case because license does not involve collection of toll by the licensee; which in other words means the money that is paid to use a road or bridge. Since, there is a specific clause in terms of Section 2 (16) (c) of the Indian Stamp Act, 1899 which brings an instrument within the ambit of a lease; by a specific mentioning that, if an instrument by which toll of any description is allowed to be collected by somebody. Hence, the present agreement between the parties as already mentioned above cannot be termed as a license. Hence, the subject matter of the agreement involved in this case of dated 13.02.2016 as already discussed above, do not amount to a license.

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Because of the discussions made above, this Court do not find any justification to accede to the prayer of the petitioner to grant any of the reliefs prayed for by it in this Writ Petition, which prayers have already been mentioned above in the foregoing paragraphs of this judgment.

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Accordingly, this Writ Petition, being without any merit is dismissed.

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(Anil Kumar Choudhary, J . )

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High Court of Jharkhand, Ranchi Dated the 02^nd of February, 2024 AFR/ Animesh

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Balaji Enterprises through Its Partner Navneet Kumar Pandey v. the State of Jharkhand through Its Secretary Road Construction Department

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Balaji Enterprises through Its Partner Navneet Kumar Pandey v. the State of Jharkhand through Its Secretary Road Construction Department

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