Dismissed

The Government of Andhra Pradesh, Department of v. M/s.Global Shelters Pvt.ltd

Telangana HC25 Jul 2022WA/96/2013

Case brief

AI extract

What is this about?

The High Court for Telangana dismissed two writ appeals filed by the Revenue Department challenging the Single Judge's order in tax matters. The Court held that a development agreement does not convey title but confers development rights, thus declining to interfere with the appellate authority's decision regarding stamp duty.

What did the court decide?

The writ appeals were dismissed. The interim orders stood vacated. Miscellaneous pending applications were closed.

The Government of Andhra Pradesh… — Civil Procedure and Limitation | Telangana HC (2022)

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13276 |

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HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

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IVONDAY ,THE TWENTY FIFTI,I DAY OF JULY rWO THOUSAND AND TWENTY TWO

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PRESENT

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THE HONOURABLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HONOURABLE MRS JUSTICE SUREPALLI NANDA

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WRIT APPEAL NOS: 96 AND 148 OF 2013

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WA Nos: 96 of 2013

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Writ Appeal under clause 15 of the Letters Patent filed against the order dated 5.3.2012 and made in WP.No.33182 of 2O1O and frass on the file of the High Court.

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Between:

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'1. The Government of Andhra Pradesh, Department of, Revenue ,Rep.by its Secretary (Revenue) Secretariat,Hyderabad

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The Sub-Registrar, Secunderabad,, -

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The District Registrar, Hyderabad and Appellate Authority, under Section 72 of the Registration Act 1908 Hyderabad District, Office of the District Registrar of Assurances, Red Hills, Hyderabad

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...APPELLANTS/RESPONDE NTS

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AND

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1 M/s.Global Shelters Pvt.ltd, A Company incorporated under lndian Companies Act 1956, registered office at 810-818, 8th floor,Swapnalok complex, Sarojinidevi Road, Secunderabad

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2 M/s.Binjusaria Estates,, a partnership firm,having its Regd.office at H.No.10/56, Old Bus Stand Banganpally, Kurnool District, rep.by its Managing partners Vinod Kedia, S/o.Banwarilal Kedia,(ii) B.C.Manhoar Reddy

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3 l//s.. R. Estates,, a partnership firm,having its Regd.office at H.No.10/56, Old Bus Stand Banganpally, Kurnool District, rep.by its Managing partners (i) Mr.Anil Keda,S/o.Banwarilal Kedia (ii), B.C.Janardhan Reddy,S/o.B.C.Guru Reddy

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4 M/s.Sri Lakshmi Estates, a partnership firm,having its Regd.office at H.No.10/56, Old Bus Stand Banganpally, Kurnool District, rep.by its Managing partne(i), B.C.Janardhan Reddy,S/o.B.C.Guru Reddy

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,..RESPONDENTS/PETITIONERS

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l.A. NO: 1 O[ 2013(WAMP. NO: 226 OF 2013)

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Petition under Section 1 51 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend the operation of the order in WP.No,33182 of 2010 dated 5.3.2012 pending decision in the above Writ appeal.

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Counsel for the Appellants: GP FOR REVENUE

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Counsel for the Respondents: SRl. DISHIT BHA'ITACHARJEE

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WA NO: 148 OF 2013

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Writ Appeal under clause 15 of the Letters Patent Appeal against the order dt 5.3.2012 passed in W P No.28639 of 2010. on the file of the High Court.

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Between:

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The Government of Andhra Pradesh, Department of Revenue, rep.by its Secretary, Revenue Department, Secretariat, Hyderabad.

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The District Registrar and Collector, Under Section 41-A of the lndian Stamp Act, 1899, Red Hills, Hyderabad.

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The Commissioner and lnspector General,, Registration and Stamps and Chief Controlling Revenue Authority under 41-A of the lndian Stamp Act, 1 899, NBK Estates, ltrlusheerabad, Hyderabad.

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...APPELLANTS/RESPONDENTS

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AND

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1 M/S Global Shelters Pvt Ltd., A company incorporated Under lndian companies Act 1956, Registered office at 810-818,81h Floor, Swapnalok Complex, Sarojinidevi Road, Secunderabad.

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2 M/s.Binjusaria Estates, a partnership firm,, having its Regd. Office at H.No.10/56, Old Bus Stand, Banganapally, Kurnool District, rep.by its Managing Partners i) Vinod Kedia, S/o.Banwarilal Kedia ii) B.C.Manohar Reddy.

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3 M/s.J.R.Estates, a partnership firm,, having its Regd. Office At H.No.10/56, Old Bus Stand, Banganapally, Kurnool district, rep.by its Managing Partners i) Mr.Anil Kedia, S/o.Banwarilal Kedia ii) B.C.Janardhan Reddy, S/o.B.C.Guru Reddy.

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4 M/s.Sri Lakshmi Estates,, A partnership firm having its Regd. Office at H.No.10/56, Old Bus Stand, Banganapally, Kurnool district, rep.by its Managing Partner B.C.Janardhan Reddy S/o.B.C.Guru Reddy.

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...RESPONDENTS/PETITIONERS

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l.A. NO: 1 OF 2013(WAMP'^{NO: 361OF 2013)}

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Petition under section^{151 CPC prayingthat in the circumstancesstated in} the affidavit filed in^{support of the petition,the High courtmay be pleasedto} suspend the operation of^{the order in w.P. No. 28639 of 2010 dated 5.3.2012,} pending decision in the above Writ Appeal

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Counsel for the Appellants^{in both WAs:SRt.PARSA ANANTH NAGESWARA} RAO, GP FOR REVENUE(ASSIGNMENT)

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Counsel for the Respondents:^{SRl. DEEPAK BHATTACHARJEEFOR}

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SRI. DISHIT BHATTACHARJEE

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The Court Delivered the^following:

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THE HON'BLE THE CHIEF JUSTICE UJJAL tsHI.IYAN AND THE HON'BLE MRS JUSTICE SUREPALLI NANDA

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WRIT APPEAL Nos.96 AND 148 OF 2013

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COMMON ![JQq![ENli t1, ttt t)t: bt{ ttk't.tt,,t .ru\ttt, r'Ltot t]hullan)

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This order w'ill dispose of both \,rir appeal Nos.96 and l48 of 2013.

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Writ appcal No.96 of 201 3 arises out of W.P.No.33 182 of 2OlO lr'hereas r.vrit appeal No. 148 of 20 13 arises out of W.P.No.28639 of 2010. Both the writ petitions u,ere filed bv the respondents herein. Appellants are the State and its olficials u,ho were respondents in the writ petitions.

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We have heard Mr. Parsa Ananth Nageswara Rao, learned Government Pleader for Revenue (Assigrrment) for the appellants and Mr. Deepak Bhattacharjee, learned Senior Counsel lor the respondents.

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Both the appeals have been preferred by the appellants assailing the legality and validity of the order dated O5.03.20 12 passed bl' the learned Single Judge

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allovuing thc related tu o ri rit petitions filed by the respondcnts

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Relevant facts m a_' be briefly noted. First respondent is a construction company incorporated under the Companies Act, I 956. [t entered into a Development Agreement cum General Power of Attorney on 3O.07.2O07 $,ith the second respondent, a partnership firm and trru'o othcr firms i.r:., respondent Nos.3 and 4. The Development Agreement cum General Power of Attorney (referred to hereinafter as 'the development agreement') u,as lor der.elopment of property admeasuring 28,396 square yards in survey No. 194/10, Ward No.1, Block No.8 at Begumpet, Balanagar Mandal, Ranga Reddy District (referred to hereinafter as 'the subject property'). The deveiopment agreement r,vas registered as document No. 1789 of2OO7.

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District Registrar, H-yderabad i.e., appellant No.2 initiated proceedings under Section 41A of the Indian Stamp Act, 1899 (for short, 'the Act'hereinafter) alleging that the development agreement had the effect of

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conve-ying title in favour of some ol the parties and therelr.lrc, the stamp dut-r' r,vhich is pavablc on a transaction of sale ought to have been paid. In this connection, a shoq, cause notice^.uvas issued b1, appellant No.2 on 13.08.2010. A joint represenrarion was submitted by the respondents to the said shon, cause notice on 31.08.20 lO. Hou ever, appellant No.2 passed al order dated 18.09.2010 holding that the development agreement conveys title and therefore it is basically a sale cum development agreemr:nt. He worked out that total stamp dut-v required to be paid was Rs.4,87,26,390.O0 but only Rs.3,OO,O0O.O0 was paid as stamp dury. The duty required to make up the deficit was determined at Rs.4,84,26,390.O0. Respondents were therelore called upon to pay the aforesaid deficit stamp duty.

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Aggrieved by the aforesaid order dated 18.09.20 1O, first respondent preferred an appeal belore the third appellant under Section 56 of the Act. By the order dated 09.1 1.20 lO, the appellate authority noticed that by virtue \ of the development agreement, there is conveyance of

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property between parties of the first part and parties of the second part. Therefore. the der,'elopment agreement had to be treated as a clocument shos.ing sale cum development agreement cum general power of attorney. Accordingly, the order of the second appellalt was confirmed and the appeal i.r,as dismissed.

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B. At this stage first respondent filed W.p.No.28639 of 2010 assailing the legalit-l' and validity of the order dated 18.09.20 1O as affirmed bv rhc order dated 09.11.2O10.

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Respondents \ ranted to withdraw from the development agreement on account of certain reasons. Therefore, the parties thereto executed a document titled 'surrender of development rights agreement' on 2O.Og.2OlO. When the document was presented for registration before the Sub Registrar, Secunderabad on 28.O9.2OlO, the Sub Registrar informed the respondents that since an order under Section 41A of the Act was passed for collection of stamp duty and registration charges, a charge had been created against the subject property. Consequentiy, the document could not be

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rcgistcrecl.^'['his order dated 28.09.2010 r.arne t,r ]>e challt:r-rqed in W.P.No.33 182 of 20lO

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Learne d Single Judge after hearing the matter held that there \'as nothing in the development agreeme nt to come to anv conclusion that one party to the document had conve-r,ed title in respect ol the subject properrv to the other party. Even if there were some dor_rbts earlier, once the explanations were given by the respondents, second appellant ought to have dropped thc proceedings. It was not lor the second appellant to brand the development agreement as a sale deed, muchless to expand the scope of it. Accordingly, the order dated 18.09.2010 was interfered with. Since the Sub Registrar, Secunderabad had refused to register the surrender of development rights agreement vide order dated 28.O9.2O1O, learned Single Judge held thar once the order under Section 41A of the Act is set aside, the very basis for order dated 28.O9.2O1O ceases to exist. J.ccordingly both the writ petitions were allowed by setting aside the impugned orders.

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1 1. Hence the u'rit appeals

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Mr. Rao, learned Assistant Go.ernment pleader for Revenue (Assignment) submits that il the development agreement is carefully gone into, it is apparent that by the said agreement, therc is conveyancc ol title by one party to the other party. Therefore, the Sub Registrar had issued notice to the respondents. Though the respondents contended that there lvas no transfer of title having regard to the recital of the development agreement, second appellant had rightl-y passed the order dated 18.09.2010 construing the development agreement as an agreement for sale, w,hereafter the chargeable stamp duty was computed. Learned Single Judge was not justified in interfering with the aforesaid order.

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12.1. In support of his submissions, learned Government Pleader has placed reliance on the following decisions.

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(1) Natraj Steels (Private) Limited v. Chief Controlling Revenue Authori(yt, 2pd

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(2) Omprakash v. Laxminarayanz.

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'^{2oo4 (6) ALD849}

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Per contre, Mr. Deepak Bhattacha{ee, Icarned Senior Coutnsel for the respondents asserts that l:,r.rvat.of thc dcvelopment agreement, the owners and the vendors had onl.r' conlerred development rights on the developer i.e., lirst respondent. Such an agreement could not have been construed to be the document con\re_ying title. Therelorc, learned Single Judge rightly interfered u.ith the order of the second appellant. Supporting the order of the learnecl Single Judge, learned Senior Counsel has placed reliance on the following decisions:

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(l ) Himalaya House Company Limited, Bombay v. Chief Controlling Revenue Authoritys,

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(2) Municipal Corporation of Delhi v. pramod Kumar Guptaa,

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(3) Namburi Basava Subrah.maayam v. Atapati Hymavathis, and

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(4) Yellapu Uma Maheswari v. Buddha Jagad.heeswara Rao6.

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t 201+ ( t ).,rt-tr l: lscr t 1t9u21 I scc utr, '^{atR t99ts<' qrrt} i I996 sCALI, (1) t7B

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"^{(u o} t:) to S('('^lliT : l0 t5 SCC onLine SC 925

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Submissions made by leerrned counsel lor the parties have received the due consideration of the Court.

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We have alreack, noted thc subsrance ol the dispute between the parties. euestion before the learned Single Judge was whether the registering authority under the Act .r"'as justified in construing the der..clopment agreement as a document conveying title and thereafter lerrying higher stamp duty? This was answered bv the learned Single Judge in the following manner:-

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A development agrcement i,tas executcd in respect of the property mentioned above in favour of the petitioner- In the course of narration, the transactions that took place between the various parties, in the context of acquiring rights over the propertt, u,cre mentioned. 'lhere is nothing to clisclosc that one part-. to the document has conveyed title in respect of the property to the other. Even if there exists any doubt in this regard, the replies given by the petitioner and other recipients of notices clearly shov,, that they did not intend to bring about any transaction of transfer of property through the document. Therefore, whatever ma1. have been the justification for the Registrar to initiate proceedings under Section 4l_A of the Act, he ought to have dropped them once the persons concerned stated that they never intended to convey title in respect of the property. Added to that, the document r,,.as registered as "Development Agreement cum-General power of Attorney". It is not open to the Registrar to brand the

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i.or_iLr:la'lli ais al sale dee(i, rIrLLCh ess to expand thc scope L I it

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l'Lt' onlt rc.1sort, ort accoLlnt of rrhich the Sutt l.ir-rt s,r',,: ralLi!a(l lo regisie: tlte 'Surrcndcr of l)r-,.1,)l)rri(nt lliqflts Agrelrncnt is that an order uars lass.al^{LrnclerSectiorl+1 A of ttre Act inrelation to the} cer eloprrent agreem.-nt and that charge has beel] creatcd ag.li :rr Lhe properh,, ibr pa\ment of the deficit stamp (:Li1\ On(C tl)is (loLrrt has sr.t ztside the order passccl L.ndcr Sccrion^.1 1A oi thc A.t, ttre vcn. ltasis lbr this t:ca -sr: s 1o e rist

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'[ hercfore, the \.rit petitions are allorved and the irrrl ,.- -,rutJ( rs are set aside.

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To appreciate Lhe above, it would be apt to briefly refer to certain relevant provisions of the development agreement. The development agreement has got three parties. Respondent Nos.2, 3 and 4 herein are parties of the first part, who have been referred to as the owners. There were altogether thirty-five pa_rties of the second part who were the vendors. The third party is respondent No.1 who is the developer.

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17 . From a perusal of the recitals of the development agreement, it is seen that the development agreement traces the history of how the vendors had conveyed and delivered title ol the subject property in favour of the

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owners including b-'^{\'a)' of agreementsof saleexecuted} earlier. By u,ay of the^{developmentagreement, the} vendors i.e. parties ol the second^{part jointlvand} severally declared that^{the subjectpropertywas free from} any charge, encumbrance^{etc and thata clear marketable} title was conferred in^{favour ol theownersi'e',} respondent Nos.2,3^{and 4 herein. RespondentsNos'2,3} and 4 being the^{absolute ownersof the subject propcrt)'} entered into construction^{agreementwith the third party} i.e., the developer,^{who is none other than the first} respondent herein.^{The agreementlurthersays that the} owners and^{vendorsjointly and severally have decidedto} devolve the entire^{subject property infavour ofthe} developer.

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As per clause^{1.1(d) of the developmentagreement'} development shall^{mean and include developmentof the} schedule^{property. Owners' allocation has been defined in} clause 1.1(t) to^{mean and include2,11,75O squarefeet or} 27.Sok of the built^{up area in the buiidingcomplex with} proportionate parking^{area thereonwhich the developer}

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agreed to corn pen satc the o\'ners along with all rights appurtcnan t to sLlch area, such as. undif ided land share, undivicled share in common areas and facilities, undivided share in rool right etc. Clause 2 of the development agreement deals r.l,ith development, commercial exploitation and transfer. As per the said clause, subject matter of the development agreement is development, commercial exploitation and transfer of propert.y ol a minimum area of 7,7O,OOO square feet with adequate car parking and other amenities of 4,50,000 square feet in the same property as per the development plan. As per clause 4. 1 , the land owners have agreed to permit the developer to develop the subject property by constructing a complex in accordance with the permission sanctioned by the municipal authorities. Clause 6. I deals with owners' allocation. lt says that in consideration of the land, vendors allowing the developer to con struct the building complex on the subject -propertv,^{the developer agreed to compensate the land} owners by giving 2,11,75O square feet or 27.5o/o (approx) of built up area in the building complex with adequate

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car parking proportionatelv along with all righrs appurtenant to such area, such as, undivided land share, undivided share in common areas and lacilities etc.

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Thus, from the above, it is evident that transfer ol rights in the subject land had earrier taken prace between the vendors and the o\.ners i.e., between the parties of the second part and the first part, by virtue of which parties of the first part i.e., respondent Nos.2, 3 and 4 had become the absolute o.,-ners with marketable title. Such conveyance had not taken place through the medium ol the development agreement but had taken place earlier. The development agreement only takes note of the eariier developments and records the same. By way of the development agreement, only development rights have been conferred on the developer i.e., party of the third part, respondent No. t herein, by the owners lbr development of the subject land in terms of the development agreement. Therefore, such a development agreement car-lnot be construed to be a document for sale or a document conveying title.

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In Municipal Corporation of Delhi (supra), the question before thc Strprcrne Court r,r.as u,l-rether duty was payable under Section l4Z of the Delhi Municipal Corporation Act, i957, on a sale certificate issued by the Civil Court undcr Order XXI Rule 94 of the Code ol Civil Procedure. 1908 (CPC). Supreme Court observed that the expression 'instrument' appearing in Section 147 of the Delhi Municipal Corporation Act, 1957 has the same connotation as the r.vord has under the Act. In the facts of that case, Supreme Court held that the expression 'instrument of sale of immovable propertv, means a document effecting transfer. The title to the property in question has to be conveyed under the document. In other words, the document has to be a vehicle for transfer of the right, title and interest. A document merely stating a fact that transfer had already taken place cannot be included within this expression. A paper which is recording a fact or i s attempting to furnish evidence of an already concluded transaction under

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u,hich title has alrcady passed on cannot be treated to be such an instrument.

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Supreme Court in Namburi Basava Subrahmanyam (supra) explained that nomenclature of the document is not conclusive. Recitals in the document as a whole and the intention of the executant besides acknowledgement thereol by the parties are conclusive.

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This has been reiterated in yellapu Uma Maheshwari (supra) wherein Supreme Court held that it is well settled that the nomenclature given to the document is not the decisive factor but the nature and substance of. the transaction has to be determined with reference to the terms of the document.

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In Omprakash (supra), Supreme Court held that an agreement to sell is a conveyance within the meaning of the Act and if such a document is not duly starnped it is inadmissible in evidence.

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We fail to understand as to how this decision can be of any assistance to the appellants.

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Similar is also the case in Natraj Steels (private) Limited (supral, n.herebl. a learned Single .Iudge of rhis Court had examined Section 41A of the Act and the procedure Iaid dor.r.n thercin.

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On due consideration, we are ol the vieu. that learned Single Judge was justified in setting aside the order of the second appellant dated 1g.09.2010 as u,ell as the consequential order dated 28.09.2010. The said order does not suffer from any error or infirmity to \ /arraflt interference. We do not find any merit in the writ appeals. Accordingly the writ appeals are dismissed. Consequently, the interim orders stand vacated.

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Miscellan eous applications, pending if any, shall stand ci,o,sed.

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SD/-K.ON IM //TRUE COPY// DEPUTY REGIS R TO, SECTION o FICER 1. 2 CCs to SRI. DISHIT 1 !*occs^{to Gp r",-} R^t,.I1I]19HARJEE^{Advocate toPUCl} J. two cD copies. evenue' High court for the State of-Tiirnnrn, louTl !.^OneSpare bopy

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