Bombay High Court
WADHWA CONSTRUCTION AND INFRASTRUCTURE PVT. LTD.versusSTATE OF MAHARASHTRA, THROUGH ITS SECRETARY, REVENUE AND FORESTS DEPT. AND ORS.
- Decided
- Disposal
- Allowed
Holding
Only the rights and consideration existing on the date of execution of the Joint Development Agreement are to be valued for stamp duty, excluding contingent future rights, applying the statutory 1.2 conversion factor and the construction rate of Rs.8,500 per sq. m, rendering the authorities' valuation method unsustainable.
Summary
The petitioners, Wadhwa Constructions & Infrastructure Pvt. Ltd. and Navin Makhija, challenged the stamp duty assessment on a Joint Development Agreement executed on 18 February 2014 with Valuable Properties Pvt. Ltd., arguing that the authorities had incorrectly included future contingent rights, used an improper conversion factor, and applied an inflated construction rate. The State contended that the agreement created present development rights attracting Article 5(g‑a)(i) of the Maharashtra Stamp Act and that the valuation should consider all possible scenarios, including revenue‑sharing and the optional swap of additional land. The Court examined the nature of the agreement, the distinction between present and contingent rights, the applicable FSI (0.5, not 0.1), the statutory conversion factor (1.2, not the contractual 1.5), and the correct construction rate (Rs.8,500 per sq. m). It held that only rights existing on the date of execution are chargeable, that the Second Schedule land and additional vertical entitlement are contingent and cannot be valued as present, and that the authorities’ valuation method was erroneous. Consequently, the petition was allowed and the earlier orders were set aside, directing a fresh valuation in accordance with the Court’s findings.
Issues considered
- The correct method of valuing a Joint Development Agreement for stamp duty under the Maharashtra Stamp Act.
- Whether contingent future rights, such as the swap notice and additional vertical entitlement, should be included in the valuation.
- The appropriate floor space index (FSI) to be used for valuation on the execution date.
- The correct conversion factor for carpet area to built‑up area under the ASR Guidelines.
- The applicable rate for the construction component of consideration.
- Whether revenue‑sharing provisions constitute present consideration for stamp duty.
- Whether the agreement falls under Article 5(g‑a)(i) as a conveyance or merely an executory agreement.
Legislation cited
- Maharashtra Regional and Town Planning Act, 1966 — s. 20(4)
- Maharashtra Stamp Act, 1958 — s. 2(na), 32A(2), 32B, 33A, Article 5(g-a)(i)
Subjects
- stamp duty
- contingent contract
- joint development agreement
- floor space index
- valuation
- Maharashtra Stamp Act
- conversion factor
- revenue sharing
- swap notice
- FSI
- construction rate
Judgment
wp11115-2016-J.doc
AGK
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.11115 OF 2016
1. Wadhwa Constructions & Infrastructure
Private Limited
2. Navin Makhija … Petitioners
ATUL Vs.
GANESH
KULKARNI 1. The State of Maharashtra
Digitally signed by
ATUL GANESH
KULKARNI 2. Appellate Authority & Deputy Director
Date: 2026.09.07
12:00:02 +0530 General of Registration and Deputy
Collector of Stamps
3. Collector of Stamps, Raigad … Respondents
Mr. Girish Godbole, Senior Advocate with Mr. S.S.
Kanetkar, Mr. Parimal K. Shroff, Mr. D.V. Deokar, and
Mr. Sachin Pandey i/by M/s. Parimal K. Shroff & Co.,
for the Petitioners.
Mr. Yatin Shashikant Khochare, “B” Panel Counsel for
the Respondents-State.
Mr. Amit Shedage, Collector of Stamps, Raigad, and
Mr. Amol Shinide, ATP, JDR Office, Alibag Raigad, are
present.
CORAM : AMIT BORKAR, J.
RESERVED ON : AUGUST 31, 2026.
PRONOUNCED ON : SEPTEMBER 7, 2026
JUDGMENT:
1. By the present Writ Petition filed under Articles 226 and 227
of the Constitution of India, the Petitioners are challenging the
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legality, validity, and correctness of the order dated 19 March 2016
passed by the Joint District Registrar and Collector of Stamps,
Raigad, purportedly in exercise of powers under Sections 32A(2)
and 33A of the Maharashtra Stamp Act, 1958. The Petitioners
challenge the order dated 12 July 2016 passed by the Appellate
Authority, namely, the Deputy Inspector General of Registration
and Deputy Collector of Stamps, in Appeal No.14 of 2016, as well
as the demand notice dated 6 August 2016.
2. The facts and circumstances which have resulted in the filing
of the present Writ Petition, as stated by the Petitioners, are as
follows. The Union of India, Department of Policy & Promotion,
Ministry of Commerce, issued Press Note No.2 of 2005 prescribing
the procedure for Direct Foreign Investment in the real estate
sector. M/s Valuable Properties Pvt. Ltd., a Company incorporated
under the Companies Act, took benefit of the said Press Note No.2
of 2005 and acquired development rights in respect of certain
lands situated in Taluka Panvel, District Raigad, in the villages of
Vardoli, Berhe and Bingarwadi, forming part of the Panvel Urban
Special Region of the Mumbai Metropolitan Region. On 10 March
2006, the Government of Maharashtra issued Development
Control Regulations for a Special Township Scheme for
development of integrated townships in the State of Maharashtra.,
on 28 August 2009, Special Development Control Regulations
were notified by a Notification relating to Township / Mega City
Regulation. On 18 February 2014, the Petitioners issued a
Performance Guarantee in favour of Valuable Properties Pvt. Ltd.
On the same date, namely, 18 February 2014, the Petitioners and
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Valuable Properties Pvt. Ltd. entered into a Joint Development
Agreement. On the basis of the consideration agreed under the
said Agreement between Petitioner No.1 and VPPL, the stamp duty
payable on the instrument was calculated. The Petitioners
accordingly paid stamp duty of Rs.15,67,00,000/- on the said
instrument on 20 February 2014.
3. The Petitioners received a notice dated 5 August 2015 from
the office of the Joint Sub-Registrar, Class II, Panvel (3),
purportedly issued under Section 33A of the Maharashtra Stamp
Act, 1958. By the said notice, it was alleged that, in respect of the
instrument executed between Petitioner No.1 and VPPL, stamp
duty of Rs.31,90,35,800/- ought to have been paid. It was
therefore alleged that there was a deficit stamp duty of
Rs.16,23,35,800/-. Petitioner No.1 was called upon to show cause
within eight days as to why such amount should not be recovered.
Petitioner No.1 was directed to produce the instrument in its
possession. The notice stated that, if the instrument was not
produced, the copy of the instrument would be treated as the
instrument and would be forwarded to the Joint District Registrar
and Collector of Stamps, Raigad, Alibag, for action. In the
meantime, the Additional Director of Town Planning addressed a
letter dated 27 July 2015 to the Joint District Registrar, Raigad,
stating that the market value of the property in question was
Rs.797,58,95,000/-. Petitioner No.1 submitted its reply to the
office of the Joint Sub-Registrar-II, Panvel (3), on 14 August 2015.
In the said reply, Petitioner No.1 stated that the stamp duty
payable on the instrument had been correctly calculated and paid.
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The Sub-Registrar forwarded the notice dated 5 August 2015,
along with the reply submitted by Petitioner No.1, to the office of
the Joint District Registrar on 20 August 2015. , notices dated 9
October 2015 and 30 October 2015 were issued by the office of
the Joint District Registrar, Class I, calling upon the Petitioners to
remain present for hearing. The Petitioners filed detailed
submissions on 6 November 2015 in response to the notice. They
placed before the authority their calculation of the stamp duty
payable on the instrument dated 18 February 2014., on 29
December 2015, the Joint District Registrar issued another demand
notice calling upon Petitioner No.1 to deposit Rs.16,23,35,800/-,
along with the applicable penalty, within fifteen days. Petitioner
No.1 was given an opportunity to submit its reply within fifteen
days. In response to the said notice, Petitioner No.1 submitted
written submissions with annexures on 7 January 2016. In those
submissions, Petitioner No.1 explained its calculation regarding the
value of the consideration under the Joint Development
Agreement.
4. The office of the Joint District Registrar issued another notice
calling upon the Petitioners to remain present for hearing on 20
January 2016. On 8 February 2016, the submissions made by
Petitioner No.1 before the Joint District Registrar were recorded in
the Roznama. The Petitioners stated that the basic permissible FSI
in the U-1 Zone was 1 FSI and not 1.5 FSI, as had been calculated
by the Collector of Stamps. They stated that the basic permissible
FSI in the G-1 Zone was 0.1 FSI and not 0.5 FSI, as calculated by
the Collector of Stamps. The Petitioners contended that the
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additional area of 50.23 Acres was to be developed only if VPPL
issued a swap notice. According to the Petitioners, this was only a
future and contingent possibility and had not become a concluded
arrangement. Therefore, according to them, no stamp duty was
payable in respect of such additional area. The Petitioners
submitted that the revenue sharing arrangement in place of the
vertical entitlement was only optional. It would arise only if VPPL
was unable or unwilling to sell the constructed area measuring
12,60,000 sq. ft. of usable carpet area. The Collector of Stamps,
Raigad passed an order dated 19 March 2016. By the said order,
the Collector held that the total stamp duty payable was
Rs.37,69,13,224/-. After giving credit for the stamp duty of
Rs.15,67,00,000/- paid by the Petitioners, the Collector held that
an amount of Rs.22,02,13,224/- remained payable as deficit stamp
duty. The Petitioners were directed to pay the said amount within
sixty days from the date of the order. Certain clerical errors in the
order dated 19 March 2016 were corrected by a Corrigendum
Order dated 2 April 2016.
5. Being aggrieved by the order dated 19 March 2016 and the
corrected order dated 2 April 2016, Petitioner No.1 filed an appeal
on 16 May 2016 under Section 32B of the Maharashtra Stamp Act,
1958. The appeal challenged the order passed by the Collector of
Stamps, Raigad, dated 19 March 2016. The appeal was filed before
the Deputy Inspector General of Registration and Deputy
Controller of Stamps, Konkan Division, Thane. Hearings in the
appeal were held on 6 June 2016 and 20 June 2016 in the office of
the Deputy Inspector General of Registration. Petitioner No.1 filed
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written submissions in the appeal on 20 June 2016. The Deputy
Inspector General of Registration and Deputy Controller of Stamps
passed an order dated 12 July 2016. By the said order, it was held
that a deficit stamp duty of Rs.21,92,99,814/- was payable in
respect of the instrument executed by Petitioner No.1. Petitioner
No.1 was directed to pay the said amount within fifteen days from
receipt of the order. It was stated that, in case of failure to make
payment within the said period, interest at the rate of 2% per
month would be charged.
6. Thereafter, the Collector of Stamps issued a demand notice
dated 6 August 2016 directing Petitioner No.1 to deposit the
alleged deficit stamp duty of Rs.21,92,99,814/- within seven days.
Petitioner No.1 replied to the said demand notice by letter dated
29 August 2016. In the said reply, Petitioner No.1 informed the
Joint District Registrar and Collector of Stamps that the Petitioners
were taking steps to initiate appropriate legal proceedings
challenging the validity, legality, and correctness of the order dated
19 August 2016 passed by the Collector of Stamps, Raigad, read
with the order dated 12 July 2016 passed by the Deputy Inspector
General of Registration and Deputy Controller of Stamps, Konkan
Division, Thane. The Petitioners therefore requested the Joint
District Registrar and Collector of Stamps not to act upon the
demand notice dated 6 August 2016 and not to take any coercive
steps for implementing the said notice under the Maharashtra
Stamp Act, 1958. In these circumstances, the Petitioners filed the
present Writ Petition on 19 September 2016. On 23 September
2016, the Writ Petition was taken up for consideration. On that
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date, the statement made by the learned AGP was recorded that no
coercive steps would be taken against the Petitioners pursuant to
the impugned order until the next date of hearing, namely, 1
October 2016. The said statement was accepted by the Court. The
ad-interim order has been continued from time to time.
7. Mr. Godbole, learned Senior Advocate appearing for the
Petitioners, submits that the Petitioners are concerned with two
parcels of land. One is the larger parcel admeasuring about 298
acres and the other is the smaller parcel admeasuring about 50
acres. According to him, the contract was partly concluded in
respect of the larger parcel of land. However, even in respect of the
larger parcel, there were two contingencies built into the
Agreement. The first related to a possible increase in FSI. The
second related to the possibility of obtaining consideration through
revenue sharing instead of the premises sharing arrangement. He
submits that Recitals A, C and D of the Agreement explain the
background of the project, its scope and the extent of land
proposed to be developed. Learned Senior Advocate then refers to
the relevant definitions contained in the Agreement, including
Alternate Vertical Premises, Gross Revenue, Horizontal
Infrastructure Development, Phase-1 Land, Project Land, Salable
Area, Swap Notice, VPPL Additional Vertical Entitlement, VPPL
Entitlement, VPPL Horizontal Development Land, VPPL Horizontal
Entitlement, VPPL Land, VPPL Share, VPPL Vertical Entitlement
and Wadhawa Entitlement. According to him, these definitions are
important because they describe the respective rights and
entitlements of the parties under the Agreement.
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8. Learned Senior Advocate submits that Clauses 2.1 and 2.2
deal with the grant of rights and the coming into effect of the
Agreement. Under these clauses, VPPL granted to Wadhawa the
right to develop the VPPL Land on an "as is where is" basis, subject
to VPPL retaining FSI equivalent to 12,60,000 sq. ft. of usable
carpet area. He submits that Clause 3.1 dealing with consideration
is the most important clause for deciding the dispute. Clause 3.1.1
provides for cash consideration of Rs.187 crore. Clause 3.1.2
provides for other consideration. Under Clause 3.1.2(i), if a Swap
Notice is issued, Wadhawa is required to construct, complete and
deliver the VPPL Horizontal Development Land having an
aggregate value of Rs.21,78,00,000/-, towards infrastructure
development cost calculated at Rs.100/- per sq. ft. of ground area.
Under Clause 3.1.2(ii), Wadhawa is required to construct,
complete and deliver the VPPL Vertical Entitlement in Phase 1
retained by VPPL, having a construction value of
Rs.99,53,99,737/-, calculated at Rs.790/- per sq. ft. of usable
carpet area. According to the Petitioners, Clause 3.1.2(i) is
dependent upon the happening of a future event. Therefore, the
land covered by that clause could not have been taken into
account for determining the stamp duty payable on the date of
execution of the Agreement. Learned Senior Advocate submits that
Clause 6 of the Agreement deals with VPPL Additional Vertical
Entitlement and is directly connected with the issue of Swap
Notice. Learned Senior Advocate refers to Clause 7 relating to
Alternate Vertical Premises and, in particular, Clause 7.1.
According to him, this clause contains another contingency under
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which VPPL has an option to choose revenue sharing instead of
premises sharing. He submits that there are three separate
contingencies in the Agreement. The first arises from the definition
of VPPL Additional Entitlement. Under that provision, if the FSI
increases from 0.1 to 0.3 before the Swap Notice is issued, the FSI
area would increase to a salable area of 10,50,000 sq. ft. The
second contingency arises under Clause 6.1, which gives VPPL an
option to issue a Swap Notice. The third contingency arises under
Clause 7.1, which gives VPPL an option to choose revenue sharing.
9. Learned Senior Advocate submits that the nature of a
contingent contract is explained in Section 31 of the Indian
Contract Act. A contingent contract is an agreement where the
rights and obligations under the contract depend upon the
happening or non-happening of an uncertain future event.
According to him, such a contract does not create a present and
unconditional obligation in respect of an event which has not yet
happened. He relies upon the judgments in MCX Stock Exchange
Ltd. vs. SEBI and Kesoram Industries & Cotton Mills vs.
Commissioner of Wealth Tax in support of this submission. Learned
Senior Advocate submits that the order dated 19 March 2016
passed by the Collector of Stamps and the subsequent appellate
order are unsustainable because the authorities have proceeded on
the basis that all the three contingencies had come into existence.
According to him, this approach is not supported by the Agreement
or the material on record. He submits that the authorities have
assumed that the FSI had increased from 0.1 to 0.5 without any
proper basis. The specific assertion made in the Petition that the
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FSI had not increased beyond 0.1 has not been denied. On the
basis of the assumed FSI of 0.5, the authorities have increased the
VPPL Additional Vertical Entitlement to 11,65,000 sq. ft., although
the entitlement was dependent upon a contingency. He submits
that, while calculating the multiplier for converting FSI or carpet
area into built-up area, the authorities have applied a multiplier of
1.5 instead of 1.2. According to him, this is contrary to the
valuation guidelines issued by the Inspector General of
Registration. The same incorrect multiplier of 1.5 has again been
applied while calculating the area of Vertical Entitlement. He
submits that the parking requirement has been calculated on the
assumption that FSI of 0.5 was available., instead of taking the
construction cost of Rs.8,500/- per square metre, the authorities
have applied a sale price of Rs.24,000/- per square metre. Learned
Senior Advocate then deals with the construction cost and the rate
applicable to a ready-made flat. He submits that Clause 3 of the
Agreement specifies the consideration payable under the
Agreement. It includes cash consideration as well as constructed
area, for which a specific construction cost has been provided.
According to him, the authorities have wrongly taken Rs.24,000/-
per square metre, which is the rate of a ready-made flat, instead of
Rs.8,500/- per square metre, which is the stipulated construction
cost. He submits that Clause 32 of the valuation guidelines dated
31 December 2012 provides the method for calculation where
constructed area is to be made available. However, the authorities
have relied upon Clause 33, which applies to a case of revenue
sharing. According to the Petitioners, this has resulted in an
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incorrect valuation. Learned Senior Advocate submits that the
valuation could have been considered under four different
methods. The first method relates to construction where no Swap
Notice is given. The second relates to construction where a Swap
Notice is given. The third relates to revenue sharing where no
Swap Notice is given. The fourth relates to revenue sharing where
a Swap Notice is given. According to him, the authority has
adopted the highest of these four possible calculations. It has
adopted the calculation based on revenue sharing after assuming
that a Swap Notice had been given. Learned Senior Advocate
therefore submits that the valuation made by the authorities
suffers from several errors. First, the calculation is based upon
revenue sharing, although such revenue sharing was not an
existing obligation under the Agreement. Secondly, even the
revenue sharing calculation has been made on the basis of a
contingency which had not occurred. Thirdly, while calculating the
value of the constructed area, the authorities have applied the rate
of a ready-made flat instead of the agreed construction cost.
Fourthly, the parking area has been valued on the basis of an
incorrect saleable area and an incorrect multiplication factor.
Fifthly, the calculation does not consider the actual FSI available
on the date on which the Agreement was executed. According to
him, the calculation ought to have been based upon the FSI
existing on that date and not upon a future or assumed FSI.
10. Learned Senior Advocate submits that the 50 acres of land
described in the Second Schedule to the Agreement could not have
been included while calculating the consideration and,
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consequently, the stamp duty. According to him, the rights relating
to this land were entirely dependent upon a contingency.
Therefore, before including this land for the purpose of valuation,
the authority was required to first determine whether the
contingency had occurred. In the absence of such an event,
according to the Petitioners, the value of the said land could not
have been included for calculating stamp duty.
11. The Petitioners have placed on record a chart showing the
differences between the valuation made by the Deputy Inspector
General of Registration in the order dated 12 July 2016 and the
stamp duty calculation made by the Petitioners on the basis of the
Joint Development Agreement. The said chart gives the difference
in area, the factor applied, the total area, the rate adopted and the
resulting financial impact. The material differences shown in the
chart are considered below.
12. The first difference relates to the Vertical Entitlement.
According to the calculation made in the order of the Deputy
Inspector General of Registration, the Vertical Entitlement of
12,60,000 sq. ft. was multiplied by a factor of 1.5, resulting in a
total area of 18,90,000 sq. ft. According to the stamp duty
calculation made by the Petitioners under the Joint Development
Agreement, the same area of 12,60,000 sq. ft. was required to be
multiplied by a factor of 1.2, resulting in a total area of 15,12,000
sq. ft. The difference in the total area is therefore shown as
3,78,000 sq. ft. The rate considered for this difference is
Rs.24,000/- per sq. mtr. and the chart shows the resulting impact
at Rs.84.28 crore.
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13. The second difference shown in the chart concerns the rate
applied to the Vertical Entitlement. The rate adopted in the order
of the Deputy Inspector General of Registration is Rs.24,000/- per
sq. mtr., whereas, according to the Petitioners, the applicable rate
should have been Rs.8,500/- per sq. mtr. Thus, according to the
Petitioners, there is a difference of Rs.15,500/- per sq. mtr. The
area considered for this difference is 18,90,000 sq. ft. and the
chart shows the total impact of this difference at Rs.272.16 crore.
14. The third difference relates to Additional Vertical Entitlement
in the event of a Swap Notice. According to the valuation made by
the Deputy Inspector General of Registration, an area of 2,33,000
sq. ft. was multiplied by a factor of 1.5, resulting in a total area of
3,49,500 sq. ft. According to the Petitioners' calculation, the same
area of 2,33,000 sq. ft. was required to be multiplied by a factor of
1.2, resulting in a total area of 2,79,600 sq. ft. The difference in
the total area is shown as 69,900 sq. ft. At the rate of Rs.24,000/-
per sq. mtr., the chart shows the impact of this difference at
Rs.15.59 crore.
15. The fourth difference concerns the Additional Vertical
Entitlement in the event of a Swap Notice and relates to the FSI
applied for determining the area. According to the calculation
made by the Deputy Inspector General of Registration, an area of
2,33,000 sq. ft. was considered with FSI of 5, resulting in a total
area of 11,65,000 sq. ft. According to the Petitioners' calculation,
the same area of 2,33,000 sq. ft. was considered with FSI of 1,
resulting in a total area of 2,33,000 sq. ft. The difference is
therefore shown as 9,32,000 sq. ft. The rate considered for this
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difference is Rs.24,000/- per sq. mtr. and the chart shows the total
impact at Rs.207.80 crore.
16. The chart sets out the difference relating to parking.
According to the valuation made by the Deputy Inspector General
of Registration, 3,383 parking spaces were considered. According
to the Petitioners' calculation, the number of parking spaces was
1,387. The difference is therefore shown as 3,181 parking spaces.
The area considered per parking space is 12.5 and the factor
shown in the chart is 0.1275. The rate considered is Rs.24,000/-
per sq. mtr. and the total impact of the difference is shown as
Rs.0.71 crore.
17. The chart shows a separate difference in the rate applied to
the parking area. According to the Deputy Inspector General of
Registration, the rate applied was Rs.24,000/- per sq. mtr.
According to the Petitioners, the rate applicable was Rs.8,500/- per
sq. mtr. The difference in the rate is therefore shown as
Rs.15,500/- per sq. mtr. For the total area of 3,181 sq. mtr., the
chart shows the impact of the rate difference at Rs.4.93 crore.
18. The chart placed on record by the Petitioners gives the
overall effect of the differences stated above. It records the “TOTAL
DIFFERENCE IN VALUATIONS - as per above” at Rs.585.47 crore.
It records the valuation according to the DIGR order dated 12 July
2016 at Rs.939.99 crore. The valuation according to the JDA
calculation, after considering the valuation made for the
constructed areas to be provided to VPPL, is shown at Rs.356.35
crore. The chart accordingly records the "Difference in valuations"
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at Rs.583.64 crore.
19. Thus, the case of the Petitioners is that the substantial
difference between the valuation made by the Deputy Inspector
General of Registration and the valuation according to the Joint
Development Agreement is mainly because of the factors applied
for converting the area, the rate adopted for valuation, the FSI
taken into consideration, the Additional Vertical Entitlement
arising in case of a Swap Notice and the number and valuation of
parking spaces. The Petitioners contend that these differences have
materially increased the market value and, consequently, the
stamp duty determined by the authorities.
20. On the other hand, the case of the State is that the figures
used by the Deputy Inspector General of Registration are based
upon the terms of the Joint Development Agreement and the
applicable ASR Guidelines. The State particularly relies upon the
references in the Agreement to saleable area, FSI of 0.5, the
Additional Vertical Entitlement and the possible exercise of the
Swap Notice. The question, which therefore arises for
consideration is whether, for the purpose of determining the
market value and stamp duty payable on the instrument, the
authorities were entitled to take into account these provisions and
contingencies in the manner in which they have done. The above
chart is therefore required to be considered along with the Joint
Development Agreement, the applicable provisions of the
Maharashtra Stamp Act, the relevant ASR Guidelines and the
reasons recorded by the authorities in the impugned orders. The
mere difference between the two calculations cannot by determine
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the correctness of either calculation. The Court is required to
examine whether the particular area, FSI, rate and other factors
used by the authorities were and factually permissible on the date
of execution of the instrument.
21. Learned Senior Advocate submits that the judgment relied
upon by the Respondents in Kolte Patil vs. Chief Controller of
Stamp has no application to the facts of the present case. He
submits that, in Kolte Patil, the Development Agreement provided
for revenue sharing between the owners and the developers in the
ratio of 38%:62%. The factual position in the present case is
different because revenue sharing under the Agreement is only an
option and is dependent upon a contingency. He submits that the
judgment dated 11 November 2024 in Kolte Patil was reviewed by
an order dated 17 February 2025. By the review order, the earlier
order was set aside, and the matter was remanded to the
authorities for calculating stamp duty on the basis of the FSI
available on the date of execution of the instrument. Learned
Senior Advocate submits that the chart produced by the Petitioners
before the authorities gives the correct position of the various
factors as they existed on the date of execution of the Agreement.
According to him, the stamp duty ought to have been calculated on
the basis of those actual figures. The chart shows the difference in
the amount of stamp duty resulting from the authorities applying
excessive rates and taking into account contingencies which had
not occurred.
22. Learned Senior Advocate lastly relies upon the judgment in
Shantibhusan vs. State of U.P., 2023 SCC OnLine Page 489,
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particularly paragraph 20, to submit that provisions of a taxing
statute have to be interpreted strictly. According to him, while
interpreting such provisions, something which is not provided
cannot be added to the statute. He therefore submits that stamp
duty cannot be imposed by taking into account a future
contingency which had not occurred on the date of execution of
the instrument. In support of this submission, he relies upon the
judgment in Kesoram Industries & Cotton Mills, referred to above.
23. Mr. Yatin Khochare, learned Advocate appearing for the
State, submits that the Petitioners have placed an incorrect case
before this Court by stating that the basic permissible FSI in the G-
1 Zone was 0.1 FSI and not 0.5 FSI. According to him, this
statement is contrary to Annexure X to Government Notification
No. TPS-1213/1533/C.R.236/13/UD-12 dated 1 January 2014,
issued under Section 20(4) of the Maharashtra Regional and Town
Planning Act, 1966 ("MRTP Act"). He particularly relies upon
Modification No.6, sanctioned under Section 24 of the MRTP Act,
and submits that Clause 5.1 thereof provides for the permissible
FSI in the G-1 Zone. The relevant provision reads as follows:
“5.1(ii) Special Township Projects in G-1 Zone Development
of a Special Township Project in G-1 Zone contained in the
Regional Plan shall be permissible subjeci to the condition
that 50 percent of the gross areas of the Special Township
Project shall be kept open while such project shall be
executed on the remaining 50 percent land with basic FSI of
0.50, worked out on the entire gross area of the Project.…”
24. Learned Advocate submits that it is important to consider the
position which existed under the earlier sanctioned regulations
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before the above modification came into force. Annexure X to the
Government Notification dated 1 January 2014 records the
existing provision in the following terms:
“5.1 Special Township in urbanisable (U-2), Green (G-1).
(G-2) Zone: (I) The total built-up area / FSI of entire gross
area of the Special Township in urbanisable zone (U-2) and
Green Zone (G-1, G-2) will be 0.5.”
25. According to the learned Advocate, therefore, the contention
of the Petitioners that the permissible FSI in the G-1 Zone was only
0.1 FSI cannot be accepted in view of the provisions of the
applicable Government Notification. Learned Advocate submits
that the Joint Development Agreement contains material which
supports the case of the State. He refers particularly to the
definition of "Horizontal Infrastructure Development" contained in
the Agreement. The Petitioners have themselves agreed in the
Agreement that the infrastructure and utilities relating to the VPPL
Horizontal Development Land were required to be sufficient to
enable construction of a township having FSI of 0.5. The relevant
provision reads as follows:
“(a) In the context for Phase I Land, the Trunk Road and
VPPL Horizontal Development Land, the infrastructure and
Utilities that is required to be provided in the form of fully
developed roads (internal and external including Trunk
Road), parks, street lightning, water and electricity supply,
electricity sub-stations, sewerage, short water drainage,
telecommunication and power supply and all other common
amenities facilities / conveniences /infrastructure in
compliance with the Township Regulations, the Approved
Plans, the Approvals and Applicable Laws and in this regard
(a) with respect to the Phase I Land and Trunk Road such
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infrastructure and Utilities should be sufficient to enable
construction of a township having FSI of 1.5;
and (b) with respect to VPPL Horizontal Development Land,
such
infrastructure and Utilities should be sufficient to enable
construction of a township having FSI of 0.5.”
26. Learned Advocate points out that the Petitioners have
defined the expression "VPPL Horizontal Entitlement" in the Joint
Development Agreement. The definition refers to development
based on FSI of 0.5. The relevant provision reads as follows:
“VPPL Horizontal Entitlement shall mean the horizontal
infrastructure development, approval and utilities required
to be provided on the VPPL horizontal development land to
enable construction / development of 0.5 FSI.”
27. According to the learned Advocate, despite these clear
provisions in the Joint Development Agreement, the Petitioners
have made statements in the Writ Petition which are contrary to
the contents of their own Agreement. He submits that the
Petitioners have therefore placed an incorrect and misleading case
before this Court. He refers to the following statements made by
the Petitioners in the Writ Petition:
“i) At para 3.14, page 53 as follows:
“… It was recorded that the basic entitlement of permissible
FSI in U-1 Zone was 1 FSI and not 1.5 FSI (as computed by
the Collector of Stamps); that the basic permissible FSI in G-
1 Zone was 0.1 and 0.5 FSI (as computed by the Collector of
Stamps); …”
ii) At para 3.15, page 54 as follows:
“in computing the maximum developable area, the FSI of 1.5
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was considered for land under U-1 Zone, in disregard to the
fact that the basic entitlement of FSI for saleable component
was only 1, whereas 0.2 FSI was for the purpose of
constructing Economically Weaker Section tenements and
the additional FSI of 0.3 was on a payment of premium
which ought not to be considered in computing basic
entitlement of area available for development.”
28. Learned Advocate submits that the Joint Development
Agreement provides for different modes of consideration and
different entitlements depending upon whether the Swap Notice is
exercised or not. According to him, the Appellate Authority,
therefore, was justified in examining the instrument under both
possible situations. He submits that this approach is consistent
with the requirement of law to determine the market value by
considering the rights and obligations which arise from the
instrument on the date on which it is executed. According to him,
the valuation cannot be treated as contingent or speculative
merely because the Joint Development Agreement gives the parties
different options.
29. Learned Advocate submits that Respondent No.2 was correct
in taking into consideration the land admeasuring 50.23 Acres
described in the Second Schedule to the Joint Development
Agreement. According to him, whether possession of this land was
delivered is not relevant for determining its market value and the
stamp duty payable on the instrument. The said land forms part of
the Joint Development Agreement and the rights and obligations
relating to it have been consciously included by the parties in the
Agreement. Therefore, according to the State, Respondent No.2
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was required to consider this land while determining the market
value of the property covered by the instrument. Learned Advocate
submits that Respondent No.2 considered the various possibilities
provided for in the Joint Development Agreement. It did not
proceed merely on the basis of what the Petitioners say ought to
have happened or what might happen in future, as alleged in
ground (t) of the Petition. According to him, if the issue of Swap
Notice was irrelevant to the instrument, the parties would not have
incorporated provisions relating to it in the Joint Development
Agreement. The fact that the parties included the land described in
the Second Schedule and incorporated terms relating to that land
shows that the same forms an inseparable part of the instrument.
Respondent No.2 was therefore justified in considering the said
land for determining the market value and the corresponding
stamp duty.
30. Learned Advocate submits that the Deputy Inspector General
of Registration considered the market value by examining four
different situations relating to construction and revenue sharing.
These were as follows:
A. Division of area of construction.
i. Without Swap Notice. In this case, the shares of
Petitioner No.1 and VPPL were considered.
ii. With Swap Notice. In this case, the shares of
Petitioner No.1 and VPPL were considered.
B. Revenue sharing.
i. Without Swap Notice. The respective shares of
Petitioner No.1 and VPPL were considered.
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ii. With Swap Notice. The respective shares of
Petitioner No.1 and VPPL were considered.
31. Learned Advocate submits that out of these four methods of
valuation, the valuation based on revenue sharing where the Swap
Notice is given resulted in the highest value. Therefore, the
authority adopted that method for calculating the market value
and consequently determined the stamp duty payable on the
instrument on that basis.
32. Learned Advocate relies upon the definition of "Saleable
Area" contained in the Joint Development Agreement. The
Petitioners themselves have defined the said expression in the
following terms:
“‘Saleable Area’ means useable carpet area x 1.5 in case of
residential units.”
33. Learned Advocate submits that, at this stage, Point No.5 of
the Annual Statement of Rates, namely, the ASR Guidelines, is
relevant. According to him, the ASR refers to "built-up area".
Where the instrument uses the expression "carpet area", the ASR
provides a method for converting carpet area into built-up area by
applying a factor of 1.2. However, where the instrument uses some
other expression for the construction area, the area mentioned in
the instrument is required to be considered as the built-up area for
determining market value. According to him, therefore, when the
Joint Development Agreement refers to a particular area as
"saleable area", the authority was justified in taking that area into
consideration in accordance with the applicable ASR provisions.
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34. Learned Advocate submits that the Joint Development
Agreement concerns land admeasuring 298 acres described in the
First Schedule. At the same time, the Agreement refers to land
admeasuring 50.23 acres described in the Second Schedule.
According to him, while determining the market value, the
Respondents were correct in considering the value of the 50.23
acres covered by the Second Schedule. He submits that the stamp
duty has to be determined with reference to the property and
rights covered by the instrument as a whole. The Petitioners
cannot restrict the valuation only to the land described in the First
Schedule by contending that the land in the Second Schedule was
subject to a Swap Notice which was not issued. According to the
learned Advocate, the non-issuance of the Swap Notice does not
make the land in the Second Schedule irrelevant for determining
the market value of the instrument. What is important is that the
parties had included the said land and the related rights and
obligations in the Joint Development Agreement.
35. Learned Advocate submits that a plain reading of Clause 4.6
of the Development Agreement, appearing at page 39 of Document
No.1009 of 2014, shows that the parties had agreed upon their
respective entitlement to any additional Floor Space Index, or
other development potential, if and when such additional FSI or
development potential became available. He submits that the
Agreement provides that, if such additional FSI or development
potential became available in respect of the VPPL Horizontal
Development Land on or before the date of the Swap Notice, VPPL
would be entitled to such additional FSI or development potential.
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According to him, this provision forms part of the rights and
obligations created by the instrument. Respondent No.2 was
therefore entitled to consider the same while determining the true
market value of the property covered by the instrument. He
submits that the valuation was accordingly made in accordance
with the Maharashtra Stamp Act and the applicable valuation
rules. On that basis, the market value of the property covered by
the instrument was determined at Rs.939,99,95,350/- and the
stamp duty payable was calculated at Rs.37,59,99,814/-. Since the
Petitioners had paid only Rs.15,67,00,000/- as stamp duty at the
time of registration, the shortfall was determined at
Rs.21,92,99,814/-.
36. The learned Advocate has relied upon the following chart to
explain the difference between the calculation made in the order
dated 12 July 2016 passed by the Deputy Inspector General of
Registration and the stamp duty calculation according to the
Petitioners under the Joint Development Agreement:
Sr. Descri Type of As per DIGR As per JDA Differe Impact
No. ption Differe Order SD nce
nce Calculation
Area Fact Total Area Fact Tota Rate Tota
or Area or l Per l
Are Sq. Imp
a Mtr. act
Consi (Cr.)
dered
1. Vertica Area 12,6 1.5 18,9 12,6 1.2 15,1 3,78,00 24,00 84.2
l Differe 0,00 0,00 0, 2,00 0 0 8
Entitle- nce 0 0 000 0
ment
24
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37. Learned Advocate refers to the order bearing Outward No.
uksamefu@ Bk.ks @ 32(c) vihy & 14/16/2937 – 40/16 dated 12
July 2016. He submits that, on page 5 of the said order, VPPL
Vertical Entitlement is stated as 12,60,000 sq. ft. of carpet area,
which corresponds to 18,90,000 sq. ft. of saleable area. According
to him, this figure of 18,90,000 sq. ft. is mentioned on page 10 of
the Development Agreement, corresponding to page 110 of the
Writ Petition. He submits that, under Guideline No.4 of the Annual
Statement of Rates, where carpet area is required to be converted
into built-up area, the carpet area is multiplied by 1.2. However,
where another built-up or construction area is mentioned in the
document, such area is required to be taken into consideration.
Since the Development Agreement mentions 18,90,000 sq. ft. as
the saleable area, the Deputy Inspector General of Registration
took that figure into consideration while making the valuation.
Sr. Descri Type of As per DIGR As per Difference Impact
No. ption Differe Order JDA SD
nce Calculati
on
Rate per Sq. Rate per Difference Total Total
Mtr. sq. mtr. in rate per Area Impact
sq. mtr. (Sq. ft.) (Cr.)
2. Vertica Rate 18,90,0 272.1
l Differe 24,000 8,500 15,500 00 6
Entitle- nce
ment
38. Learned Advocate refers to the same order dated 12 July
2016 and submits that the valuation was carried out by four
methods as contemplated under the ASR Guidelines. The methods
relied upon were as follows:
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Construction Area Distribution (ASR Guidelines No. 23).
i. If Swap Notice is Not Given. While calculating
the owner's share of construction, the construction rate
of Rs.8,500/- per sq. mtr. was taken for valuation.
ii. If Swap Notice is Given. While calculating the
owner's share of construction, the construction rate of
Rs.8,500/- per sq. mtr. was taken for valuation.
Revenue Distribution (ASR Guidelines No. 24).
i. If Swap Notice is Not Given. While calculating
the owner's share, the flat rate of Rs.24,000/- per sq.
mtr. was taken for valuation.
ii. If Swap Notice is Given. While calculating the
owner's share, the flat rate of Rs.24,000/- per sq. mtr.
was taken for valuation.
39. According to the learned Advocate, all four methods were
considered and the method which resulted in the higher valuation
was adopted for determining the stamp duty.
Sr. Descri Type As per DIGR As per JDA SD Diffe Impact
No. ption of Order Calculation renc
Differ- e
ence
Area Fact Total Area Fac Total Rate Tota
or Area tor Area Per l
Sq. Imp
Mtr. act
Consi (Cr.)
dered
3. Additio Area 2,33, 1.5 3,49,2,33, 1.2 2,79,6 69,9 24,00 15.5
n-al Differ- 000 500 000 00 00 0 9
Vertica ence
l
Entitle-
ment
(in
case of
26
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Swap
Notice
)
40. Learned Advocate refers to the order bearing Outward No.
[email protected]@32(c) vihy & 14/16/2937 – 40/16 dated 12
July 2016. He submits that, on page 6 of the said order, VPPL
Vertical Entitlement is stated as 2,33,333 sq. ft. of carpet area,
corresponding to 3,50,000 sq. ft. of saleable area. According to
him, the Development Agreement contains a reference to this area
on page 9, corresponding to page 109 of the Writ Petition. He
again relies upon Guideline No.4 of the Annual Statement of Rates
and submits that, where carpet area is mentioned, the prescribed
factor of 1.2 is applied for conversion into built-up area. However,
if another built-up area is mentioned in the document, the same is
required to be considered. According to him, the Deputy Inspector
General of Registration therefore took the saleable area mentioned
in the Agreement into consideration for valuation.
Sr. Descri Type of As per DIGR As per JDA Differe Impact
No. ption Differe Order SD nce
nce Calculation
Area Fact Total Area Fact Tota Rate Tota
or Area or l Per l
Are Sq. Imp
a Mtr. act
Consi (Cr.)
dered
4. Additio Permis 2,33, 5 11,6 2,33, 1 2,33 9,32,00 24,00 207.
n-al sib-le 000 55,0 000 ,000 0 0 80
Vertica FSI 00
l differe
Entitle- nce
ment
27
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(in
case of
Swap
Notice
)
41. Learned Advocate submits that the figures of 0.5 FSI and 1
FSI have been used throughout the valuation made in the order
dated 12 July 2016. He relies upon the Notification issued under
Section 20(4) of the Maharashtra Regional and Town Planning Act,
1966, relating to the Regulations for Development of Special
Township Projects in areas covered by the Mumbai Metropolitan
Regional Plan. The Notification bears No. TPS-1213/1533/
C.R.236/13/UD-12 dated 1 January 2014. According to him,
Appendix X to the said Notification introduced certain sanctioned
modifications to the earlier Notification No.1205/MMR/DCR/CR-
48/06/UD-12 dated 10 March 2006. He particularly refers to
Modification No.1 relating to general requirements and area
requirements. According to him, under the said modification, land
falling within Green Zone 2 and other environmentally sensitive
areas was excluded for the relevant purpose.
42. Learned Advocate submits that Modification No.6 to the said
Notification modified Clause 5.1 relating to Special Townships in
the G-1 Zone. According to him, the modified provision provides
that a Special Township Project in the G-1 Zone is permissible
subject to the condition that 50% of the gross area of the project is
kept open and the project is developed on the remaining 50% land
with basic FSI of 0.5, calculated on the entire gross area of the
project. He submits that the Development Agreement, particularly
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on pages 6 and 10, corresponding to pages 106 and 110 of the
Writ Petition, refers to FSI of 0.5 in relation to the VPPL Horizontal
Development Land. Therefore, according to him, the Deputy
Inspector General of Registration correctly adopted FSI of 0.5 for
the purpose of valuation.
Sr. Descri Type of As per DIGR As per JDA Differe Impact
No. ption Differe Order SD nce
nce Calculation
No. Area Fact No. Are Fact Rate Tota
of per or of a or Per l
Parki parki(0.8 Parki per (0.8 Sq. Imp
ng ng 5*0. ng par 5*0. Mtr. act
05) king 05) Consi (Cr.)
dered
1. Parkin No. of 3,38 12.5 0.12 1,38 12. 0.12 3,181 24,00 0.71
g Parkin 3 75 7 5 75 0
g
differe
nce
43. Learned Advocate submits that the valuation of the parking
area was carried out by applying four methods. According to him,
the Deputy Inspector General of Registration followed the ASR
Guidelines relating to construction area distribution and revenue
distribution. The four calculations were as follows:
Construction Area Distribution (ASR Guidelines No. 23, 16).
i. If Swap Notice is Not Given. While calculating the
owner's share, the number of parking spaces was worked out
on the basis of saleable area of 1,75,650 sq. mtr. This
resulted in 1,750 parking spaces. The valuation was then
made by applying the construction rate of Rs.8,500/- per sq.
mtr.
ii. If Swap Notice is Given. While calculating the owner's
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share, the saleable area of 1,75,650 sq. mtr. plus 1,62,639 sq.
mtr. was considered. On that basis, 3,383 parking spaces
were worked out. The valuation was made by applying the
construction rate of Rs.8,500/- per sq. mtr.
44. Revenue Distribution (ASR Guidelines No. 24, 16).
i. If Swap Notice is Not Given. While calculating the
owner's share, the saleable area of 1,75,650 sq. mtr. was
considered and 1,750 parking spaces were worked out. The
valuation was made by applying the flat rate of Rs.24,000/-
per sq. mtr.
ii. If Swap Notice is Given. While calculating the owner's
share, the saleable area of 1,75,650 sq. mtr. plus 1,62,639 sq.
mtr. was considered and 3,383 parking spaces were worked
out. The valuation was made by applying the flat rate of
Rs.24,000/- per sq. mtr.
Sr. Descri Type of As per DIGR As per Difference Impact
No. ption Differe Order JDA SD
nce Calculati
on
Rate per Sq. Rate per Difference Total Total
Mtr. sq. mtr. in rate per Area Impact
sq. mtr. (Sq. ft.) (Cr.)
6. Parkin Rate 24,000 8,500 15,500 3.181 4.93
g Differe
nce
45. As stated in the order bearing Outward No.
[email protected]@ 33,3832 (c) vihy & 14/16/2937–40/16 dated
12 July 2016 passed by the Deputy Inspector General of
Registration, the valuation was carried out by adopting four
different methods.
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Construction Area Distribution (ASR Guidelines No. 23)
i. If Swap Notice is Not Given. While calculating the
owner's share of construction, the construction rate of
Rs.8,500/- per sq. mtr. was taken for the purpose of
valuation.
ii. If Swap Notice is Given. While calculating the owner's
share of construction, the construction rate of Rs.8,500/- per
sq. mtr. was again taken for the purpose of valuation.
Revenue Distribution (ASR Guidelines No. 24)
i. If Swap Notice is Not Given. While calculating the
owner's share, the flat rate of Rs.24,000/- per sq. mtr. was
taken for the purpose of valuation.
ii. If Swap Notice is Given. While calculating the owner's
share, the flat rate of Rs.24,000/- per sq. mtr. was taken for
the purpose of valuation.
46. The Deputy Inspector General of Registration compared the
valuation arrived at by these four methods. Since the valuation
under one of these methods was higher, the higher valuation was
taken into consideration for determining the market value and the
stamp duty payable.
REASONS AND FINDINGS:
47. I have considered the submissions made on behalf of the
Petitioners as well as the State authorities. The main question
before the Court is what rights were transferred on 18 February
2014 and what rights were to come into operation only after the
condition in the Agreement was fulfilled. Before considering the
objections raised by the parties, it is necessary to see the legal
position which applies to a development agreement where some
rights are subject to conditions or depend upon some future event.
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Merely describing a right as “contingent” will not decide the issue.
The Agreement has to be looked at as a whole. It is necessary to
see what rights and obligations were created when the Agreement
was executed and what rights were to come only when some
future event happens, or an option is exercised, or some further act
is done by the parties. Stamp duty has to be considered with
reference to the instrument and the rights which arise from it on
the relevant date. Thus, a benefit which may arise in future cannot
be included in valuation only because it is mentioned in the
Agreement. At the same time, a right which is created under the
Agreement cannot be ignored only because its exercise is to take
place later. Keeping this position in view, the submissions
regarding the development rights, the 298 acres covered by the
First Schedule, the 50.23 acres covered by the Second Schedule,
the FSI available on the date of the Agreement, the Additional
Vertical Entitlement, the conversion factor, the construction cost or
revenue sharing and the consequential parking calculation will
have to be considered.
48. The fact that an instrument contains contingent or
conditional development rights does not mean that the instrument
cannot be placed before the stamp authority for adjudication.
Likewise, merely because some right can be exercised only after a
future event takes place, it cannot follow that only nominal stamp
duty is payable. The important question is to find out what the
instrument really is and what rights were created or recorded in it
on the date of its execution. The document has to be read as a
whole. Under the Maharashtra Stamp Act, it has to be determined
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whether the document is only an executory development
agreement, whether it is an agreement relating to development
rights falling under the relevant entry of Article 5, or whether it
operates as a conveyance because ownership or an interest in
immovable property has been transferred. The name or description
given to the document by the parties cannot decide the matter.
Consideration of contingent rights:
49. While examining a contingent right, it is necessary to
distinguish between a right which is created under the Agreement
on the date of its execution, but which can be exercised only after
a condition is fulfilled, and a right which will arise only after a
future event. If the developer is given only a promise that
development or negotiation will take place after a future approval,
and there is no present possession, proprietary interest, authority
to sell or power to bind the owner, the document would indicate
an executory agreement. Even in such a case, the particular Article
applicable on the date of execution has to be considered. But
where the Agreement gives the developer an enforceable
development interest, a right to enter or possess the property, a
right to construct, a right to sell, authority to execute documents,
or an irrevocable power of attorney, the mere fact that some of
these rights can be exercised later does not mean that no present
right has been created. It would then be necessary to examine
whether a present interest or substantial rights in the property has
been created or transferred. If that is so, the question of higher
stamp duty, including treatment of the instrument as a
conveyance, would arise.
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50. In the same way, if the Agreement transfers or assigns an
interest in the land, gives possession, or makes execution of a
future sale deed only a formal step, there would be reason to
consider the provisions relating to conveyance, including Article 25
treating such instrument as a conveyance. This would depend
upon the terms of the document. However, where no right in the
land comes into existence until a separate conveyance or
assignment is executed after the condition is fulfilled, and the
owner continues to retain control over the property until that time,
there would be reason to hold that the document is not a
conveyance. Even then, the entry relating to development
agreements and the provisions under the Maharashtra Stamp Act
would have to be considered. The authority has to examine the
terms of the Agreement. Possession, control, consideration,
exclusive development rights, power to sell or assign, authority to
execute conveyances, whether the power is irrevocable, allocation
of FSI or TDR, sharing of risks and benefits, and whether the later
conveyance is intended to be a transfer or only a formal step, are
all relevant matters. The issue cannot be decided merely because a
particular right has been described as "contingent".
Principles applicable under the Maharashtra Stamp Act:
51. The decision in Suhas Damodar Sathe v. State of
Maharashtra 2025, SCC OnLine Bom 576 is relevant in this regard.
In that case, the development agreement, when read with the
power of attorney and other connected terms, gave the developer
extensive rights concerning development and possession or control
of the property, including the ability to convey or assign rights to
34
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purchasers. The Court therefore considered the effect of the
documents instead of looking only at the description of the
document as a development agreement. The principle which
follows is that the effect of the instrument has to be considered
while deciding whether it amounts to a conveyance.
52. The decision of the Supreme Court in Shyamsundar
Radheshyam Agrawal v. Pushpabai Nilkanth Patil, (2024) 10 SCC
324 is relevant. In the Maharashtra context, the Supreme Court
considered an agreement which provided for possession before or
without a later conveyance and held that such an arrangement
could attract stamp duty at the level applicable to a conveyance
under the relevant statutory provision. The later execution of a
sale deed and payment of stamp duty on that sale deed did not
remove the stamp liability which had arisen from the earlier
agreement. This does not mean that every development agreement
becomes a conveyance. The document has to be examined with
reference to the exact language of the applicable Article and the
statutory Explanation which was in force on the date of execution.
The date of execution, location of the property, registration of the
document, possession clause, rights given to the developer and the
Article applicable at that time are therefore important matters.
Examination of a case involving contingent development rights:
53. If the contention is that the instrument is liable to stamp
duty only as a development agreement and not as a conveyance, it
is not sufficient merely to say that a particular right is contingent.
It must be shown from the document that, until the specified
future event occurs, the developer has no present proprietary
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interest, no present possession having the nature of ownership, no
power to sell or convey the property, no authority to bind the
owner, and no right to compel a conveyance except in accordance
with a future agreement or other condition.
54. It is necessary to see whether the later conveyance
contemplated by the parties is intended to be a transfer of the
property or whether it is only a formal document recording a
transfer which has taken place. The position would be different
where the Agreement has given possession or control to the
developer, created development interest, permitted construction
and sale, authorised execution of conveyances, fixed the
consideration for the entire transaction, or made the future event
only a formality. In such circumstances, the contingency may only
postpone the exercise of an existing right. It may not prevent a
finding that a present interest in the property has been created.
55. The legal position can be stated as under. An instrument
containing contingent development rights can be presented for
stamp adjudication. The fact that some rights can be exercised only
after a future event does not make the instrument unstampable.
The contingent nature of a right is relevant, but it is not the
answer. The Court has to find what rights were created or
transferred on the date of execution. If the instrument presently
transfers an interest in immovable property, possession, control,
development rights or authority to convey, such rights may have to
be considered for stamp purposes. But if a particular right will
come into existence only after a future event or separate
conveyance, that future right cannot be treated as an existing right
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merely because the Agreement states what may happen if the
condition is fulfilled. The document therefore has to be read as a
whole. The authority has to identify the real nature of the
instrument, the rights which were created immediately, the rights
which were conditional, the consideration which was presently
payable or agreed, the possession and control given, the
development potential and FSI available, and the statutory Article
and valuation provisions applicable on the date of execution.
56. Before determining stamp duty, the Agreement should be
examined clause by clause along with connected documents,
wherever such documents form part of the transaction. The
authority must identify the exact Article applicable to the
instrument and give reasons as to why each present or future right
is or is not required to be included in the market value. The
important consideration remains the effect of the instrument on
the date of its execution.
Rights created on execution of the Agreement:
57. Article 5(g-a)(i) applies to an instrument "if relating to
giving authority or power to a promoter or a developer, by
whatever name called, for construction of, development of, or sale
or transfer (in any manner whatsoever) of, any immovable
property." The same provision provides for the same duty as is
leviable on a conveyance under Article 25 on the market value of
the property. Therefore, merely because the document is called a
Joint Development Agreement, the matter does not end there. At
the same time, Article 5(g-a)(i) cannot be understood to mean that
the Stamp Authority can value every right which may arise in
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future as if such right had been transferred on the date of
execution. The charging provision and the valuation provision
have to be applied to the instrument and to the rights which are
covered by it. A future event cannot be treated as happened only
because the parties have made provision for it in the Agreement.
58. The Agreement contains a clear grant of development rights
which operates from the date of the Agreement. Recital D records
that, "Subject to retention of FSI equivalent to 12,60,000 sq. ft. of
usable carpet area in respect to VPPL Vertical Entitlement (Phase I)
unto, VPPL has agreed to grant development rights of VPPL Land
to WADHWA." The operative provisions of the Agreement proceed
on the same basis. Clause 2.2 states that, subject to retention of
the 12,60,000 sq. ft. VPPL Vertical Entitlement, VPPL has agreed to
grant and WADHWA has agreed to accept "the right to develop the
VPPL Land". It provides for development of the Project Land in
accordance with the approved plans and the terms of the
Agreement. Clause 2.3 provides that the Agreement "shall become
effective on and simultaneously upon the execution of this
Agreement VPPL has placed WADHWA in possession of the VPPL
Land for the purpose of development of the VPPL Land". The
clause records the right of WADHWA to do the necessary acts for
development and implementation of the Project. Therefore, the
arrangement was not something which was only to be considered
or acted upon at a later stage.
59. The provisions relating to the Power of Attorney support this
position. Clause 5.1 records that, simultaneously with execution of
the Agreement, VPPL executed a power of attorney in favour of
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WADHWA for taking the necessary steps for obtaining approvals.
Clause 5.2 records a general power of attorney under which
WADHWA was authorised, amongst other things, to undertake
construction and development, execute agreements for sale and
lease and other documents relating to development of the land.
The Power of Attorney is stated to be irrevocable except in the case
of termination under Clause 10. Therefore, substantial rights and
authority came into existence from the date of execution. It was
not merely an arrangement to negotiate development rights at
some later stage. The rights which came into existence included
the right to develop the land which then formed part of VPPL
Land, possession for that development, authority to obtain
approvals and implement the Project, construction rights and the
powers given under the Power of Attorney. The consideration for
these rights was not left uncertain. Clause 3.1.1 provides for cash
consideration of Rs.187 crores and Clause 3.1.2 provides for
construction-related consideration. The Agreement therefore
created substantial present rights which could be considered for
valuation.
60. This finding has to remain within the limits of the rights
which the Agreement made operative at that time. The Agreement
has to be read as a whole. The definitions and provisions relating
to the Swap show that some development rights were available
immediately, whereas some other rights were to become available
only after the event mentioned in the Agreement.
First Schedule land of 298 acres:
61. The definition of "VPPL Land" is important for this purpose.
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The Agreement provides that where no Swap Notice is issued,
VPPL Land consists of the lands in the FIRST SCHEDULE. Where a
Swap Notice is issued, the lands in the FIRST SCHEDULE together
with the VPPL Horizontal Development Land mentioned in the
SECOND SCHEDULE form part of VPPL Land. The First Schedule
land was not dependent upon the Swap arrangement. It was part
of the development arrangement from the date of execution.
WADHWA obtained development rights in respect of that land
immediately, subject to the rights which VPPL retained under the
Agreement. The possession provision operates in respect of VPPL
Land as it stood at that time. Therefore, there is no reason to
postpone the valuation of the present development rights in the
298 acres merely because the Agreement contains a future Swap
arrangement. The submission that the whole transaction was
contingent and that no development right existed on 18 February
2014 therefore cannot be accepted. Such submission does not take
into account Clauses 2.2 and 2.3, the definition of VPPL Land, the
immediate possession and the Powers of Attorney. These provisions
show that an actual and enforceable development arrangement
came into effect upon execution of the Agreement. At the same
time, the submission of the State requires some qualification.
Because the development rights in the First Schedule land were
created immediately, it does not follow that every right mentioned
elsewhere in the Agreement was a present right for valuation
purposes. The Second Schedule land was dealt with under the
Agreement.
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Second Schedule land of 50.23 acres:
62. The definition of "VPPL Horizontal Development Land" refers
to approximately 50 acres of land mentioned in the SECOND
SCHEDULE. The Agreement provides that VPPL Land consists only
of the First Schedule land where no Swap Notice is issued, and
that the Second Schedule land is included only when the Swap
Notice is issued. Clause 6.1 provides that "VPPL has the option,
anytime within 3 (three) years from the Effective Date, to notify
WADHWA by giving one (1) month advance notice, that WADHWA
shall be entitled to develop the VPPL Horizontal Development
Land". The clause provides for exercise of that right by VPPL by
notifying WADHWA of its intention to grant the VPPL Horizontal
Development Land in place of the relevant additional vertical
entitlement.
63. Under the Agreement, it is VPPL which has the option to
issue the Swap Notice and not WADHWA. Clause 6.1 does not give
WADHWA an option to issue the Swap Notice. Clause 6.2 provides
that "upon VPPL giving Swap Notice to WADHWA" the obligations
relating to the VPPL Horizontal Entitlement come into effect and
WADHWA becomes entitled to the development rights in the VPPL
Horizontal Development Land. The Agreement could have
provided that the Second Schedule land stood transferred or was
available for development immediately from the date of execution.
It has not said so. Instead, it has provided for a particular event,
namely the Swap Notice, after which the development rights were
to come into effect. I therefore cannot hold that on 18 February
2014 WADHWA had the same present and exercisable
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development rights in respect of the 50.23 acres as it had in
respect of the First Schedule land. The right relating to the Second
Schedule land was provided for under the Agreement, but its
enjoyment as a development right depended upon exercise of the
option and issuance of the Swap Notice.
64. I have considered whether the existence of this arrangement
makes the Second Schedule land irrelevant for stamp purposes.
That cannot be said. The contingency is relevant to the stamp
inquiry, though it is not the only consideration. The proper finding
is that the Second Schedule land could not be valued in the 2014
determination as if the development rights in that land had
unconditionally vested in WADHWA. If the Swap is brought into
effect, the State can examine the instrument through which those
rights then become operative and can levy stamp duty in
accordance with law. The later event does not take away the power
of the State. It only means that the later right cannot be assumed
to have existed in its final form on the earlier date. A contingent
development right can be examined for stamp purposes. What
cannot be done is to take a future right and value it as a present
vested right merely because the parties had contemplated that
such right could arise in future.
Vertical entitlement:
65. The learned Senior Advocate refers to the order bearing
Outward No. uksamefu@ Bk.ks @ 32(c) vihy & 14/16/2937 –
40/16 dated 12 July 2016. He submits that, on page 5 of the said
order, the VPPL Vertical Entitlement is shown as 12,60,000 sq. ft.
carpet area and the same is taken as 18,90,000 sq. ft. saleable
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area. He also points out that the figure of 18,90,000 sq. ft. is
mentioned on page 10 of the Development Agreement,
corresponding to page 110 of the Writ Petition. According to him,
under Guideline No.4 of the Annual Statement of Rates, where
carpet area is to be converted into built-up area, it has to be
multiplied by 1.2. However, where the document itself gives
another built-up or construction area, that area is to be considered.
Therefore, since the Development Agreement mentions 18,90,000
sq. ft. as saleable area, the Deputy Inspector General of
Registration was justified, according to him, in taking the said
figure for valuation.
66. In my opinion, the figure of saleable area mentioned in the
Development Agreement cannot be treated as the built-up area for
stamp valuation. The fact that 18,90,000 sq. ft. is mentioned as
saleable area does not mean that the conversion factor of 1.2
under Guideline No.4 is to be ignored. The Authority was required
to first see what area is required to be taken under the applicable
ASR and then apply the conversion as provided. The expression
“Saleable Area” used by the parties in the Agreement cannot, only
because it is mentioned there, become the built-up area for the
purpose of stamp duty. In the present case, the Agreement first
refers to VPPL Vertical Entitlement of 12,60,000 sq. ft. of usable
carpet area and thereafter refers to the corresponding saleable
area of 18,90,000 sq. ft. Therefore, the figure of 18,90,000 sq. ft.
could not be taken as the area for valuation without seeing how
that figure is required to be treated under the ASR. Guideline No.4
was required to be applied to the area which is relevant for
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valuation. The Deputy Inspector General of Registration, therefore,
was not justified in taking 18,90,000 sq. ft. only because the same
is mentioned as saleable area in the Agreement. The valuation will
therefore have to be reconsidered by applying the proper
conversion to the carpet area, as required under the applicable
guideline.
Additional Vertical Entitlement:
67. The Additional Vertical Entitlement has to be considered
from the VPPL Vertical Entitlement which was created under the
Agreement. The Agreement defines "VPPL Additional Vertical
Entitlement" as 233,333 sq. ft. of usable carpet area, with
adjustment in the manner provided in the Agreement depending
upon changes in FSI. The same definition connects the additional
entitlement with the Swap mechanism and provides for
corresponding adjustment in the Saleable Area where there is an
increase in FSI before issuance of the Swap Notice. Clause 6.1
makes the arrangement clear. The benefit to WADHWA and the
corresponding obligations concerning the Horizontal Development
Land arise in the situation where the Swap option is exercised.
Clause 6.2 then provides that upon VPPL giving the Swap Notice,
the obligations concerning the VPPL Horizontal Entitlement come
into effect and WADHWA becomes entitled to the development
rights in the VPPL Horizontal Development Land. I therefore find
that the Additional Vertical Entitlement was not presently vested
entitlement of WADHWA on 18 February 2014. It was a future
consequence connected with the Swap option. The fact that the
Agreement had stated a particular quantity for this entitlement
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does not make the right presently vested.
68. This does not mean that the Additional Vertical Entitlement
was meaningless promise. It was a right which could become
enforceable when the condition mentioned in the Agreement was
fulfilled. A right may exist as a conditional benefit and still not
amount to a present development right in the land which can be
treated as vested for valuation of the instrument. Clause 4.6
provides that if any additional FSI or other development potential
becomes available in respect of the VPPL Horizontal Development
Land "on or prior to the date of the Swap Notice", VPPL shall be
entitled to it, whereas additional FSI or development potential
becoming available after the Swap Notice belongs to WADHWA.
Such division of rights depending upon the date of the Swap
Notice would not have much meaning if the entire development
potential of the Second Schedule land had become vested in
WADHWA on 18 February 2014.
FSI available on 18 February 2014:
69. I now turn to the question of FSI. For this purpose, a
distinction has to be made between the FSI which was available on
the date of execution and any FSI which might become available
later because of changes in planning permissions, development
potential or other circumstances. The Agreement gives some
indication in this regard. The definition of "Horizontal
Infrastructure Development" provides that, in relation to the Phase
I Land and Trunk Road, the infrastructure is to be sufficient to
enable construction of a township having FSI of 1.5. In relation to
the VPPL Horizontal Development Land the definition states that
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the infrastructure is to be sufficient to enable construction of a
township having FSI of 0.5. The definition of "VPPL Horizontal
Entitlement" refers to horizontal infrastructure, approvals and
utilities required "to enable construction / development of 0.5 FSI"
on the VPPL Horizontal Development Land. This position is
consistent with the Government position relied upon before the
Court, under which development of a Special Township Project in
the G-1 Zone was permissible with basic FSI of 0.50 on the gross
area, subject to the condition relating to the open area. I therefore
find that the available basic FSI for the relevant G-1 Special
Township land on the date of execution was 0.50 and not 0.10.
70. The submission that the available FSI on 18 February 2014
was only 0.10 therefore cannot be accepted. The Agreement
proceeds on the basis of 0.5 FSI in relation to the VPPL Horizontal
Development Land. The State authority could not disregard this
provision while determining the development potential of the
transaction. However, merely because 0.50 FSI was available, the
authority could not adopt some higher future FSI on the ground
that the planning provisions might permit development potential.
Whether future or maximum FSI could be adopted:
71. The stamp valuation has to be connected with the
instrument on the relevant date. The authority therefore had to
determine what development potential was available in respect of
the property forming the subject matter of the instrument on 18
February 2014. Clause 4.6 refers to additional FSI or other
development potential may become available in future. It deals
with development potential available on or before the Swap Notice
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and development potential which becomes available after the
Swap Notice. Therefore, a valuation based upon future maximum
development potential, without showing that such development
potential was available on the date of execution, cannot be
sustained. The authority cannot select the highest possible
development which may arise in future and include it in the
valuation of the earlier instrument merely because the parties had
contemplated that such development might become available.
72. It is no answer to say that market value need not be confined
to the construction existing on the date. Development potential is
relevant. But the potential which can be considered must be one
which the owner and developer could use on the relevant date. A
potential dependent upon future approval, future increase in FSI
or future Swap cannot be treated as presently available FSI. I
therefore find that the authority was entitled to consider the FSI
available on 18 February 2014. It was not entitled to replace that
FSI by a future or maximum FSI which was not available and
operative on that date.
1.5 factor and 1.2 factor:
73. The next question is regarding the conversion factor. For this
purpose, the meaning of "Saleable Area" has to be kept separate
from the valuation method of converting carpet area for applying
the ASR rate. The Agreement defines the VPPL Vertical Entitlement
with reference to 12,60,000 sq. ft. of usable carpet area. It refers to
the corresponding figure of 18,90,000 sq. ft. as the "Saleable Area".
Therefore, the factor of 1.5 is used in the Agreement for the
purpose of converting the entitlement into saleable area. That
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factor cannot become the conversion factor for determining market
value under the ASR. The description of Saleable Area serves the
arrangement between the parties. The Stamp Authority must still
apply the conversion method provided under the applicable
valuation method.
74. The material relied upon by the Petitioners shows that, for
converting the usable carpet area into the area to which the ASR
rate is to be applied, the appropriate factor is 1.2. The State
authority has treated the factor of 1.5 as if it was the prescribed
valuation conversion factor. I do not find that approach
sustainable. The 1.5 factor may have significance for determining
the entitlement between VPPL and WADHWA. Its presence in the
Agreement does not make it the conversion factor prescribed for
stamp valuation under the ASR. I therefore hold that, for the
present stamp valuation, the area has to be converted by applying
the applicable 1.2 factor and not the 1.5 factor. The use of 1.5 by
the authority as the valuation conversion factor was therefore
erroneous.
Construction cost and sale price:
75. The next issue relates to the rate which is to be applied. The
Agreement contains different components and they cannot be
combined merely because they occur in the same transaction.
Clause 3.1.2(ii) records that WADHWA is required to "construct,
complete and deliver free and clear of any Encumbrances the VPPL
Vertical Entitlement (Phase I)" aggregating to a value of
Rs.99,53,99,737 at the specified rate of Rs.790 per sq. ft. of usable
carpet area. The rate works out to approximately Rs.8,500 per sq.
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metre. This is a construction obligation. It represents the agreed
value of the construction which WADHWA has to provide to VPPL.
It is different from the market sale price at which the residential
premises may be sold to third-party purchasers. The Petitioners are
therefore correct to the extent that the authority could not take the
ASR sale price of approximately Rs.24,000 per sq. metre and
substitute that rate for the construction value while calculating the
construction component of the consideration.
76. At the same time, I do not accept the submission that
because there is a construction-cost component, the entire stamp
valuation must be restricted to construction cost. If the Agreement
contains a genuine sale-revenue component which is consideration
for the development rights and is operative, that component may
have to be considered. The proper exercise is to identify the actual
components of consideration and then apply the statutory method
applicable to each. In the present Agreement the construction
component has to be considered as construction consideration at
the construction value, subject to the applicable valuation
provisions. It cannot be increased merely by applying the retail
sale price of the completed premises.
Revenue Sharing under Clause 7.1:
77. The State has relied upon Clause 7.1 of the Agreement and
the provisions relating to sharing of Gross Revenue. Clause 7.1
deals with the sale of the Alternate Vertical Premises and provides
an option to VPPL concerning the manner in which such premises
are to be sold. The clause refers to VPPL's entitlement to receive
35% of the Gross Revenues in the circumstances contemplated
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under that clause. The question is whether this provision
constitutes consideration for the development rights granted under
the Agreement and, if so, to what extent it was required to be
considered while determining the market value of the instrument
as on 18 February 2014.
78. At the outset, the submission that the revenue-sharing
provision must be left out only because the actual sale of the
premises and receipt of the revenue would take place later cannot
be accepted. The decision in Kolte Patil Developers Ltd. makes it
clear that consideration for development rights may be in the form
of a share in gross sale proceeds, even though such consideration
is payable only when the constructed premises are sold. In that
case, the owners were entitled to 38% of the gross sale proceeds
and the Court held that the deferred revenue sharing constituted
consideration for transfer of the development rights. The Court
held that where consideration under a development agreement is
in the form of revenue sharing, such consideration has to be
computed as on the date of execution. For that purpose, the
development potential available on that date and the applicable
ASR relating to the land and constructed tenements are required to
be considered. The fact that the premises would be constructed
and sold only later does not make the consideration incapable of
valuation.
79. The Review Order in Kolte Patil is relevant. It makes it clear
that when the consideration has to be worked out on the basis of
the development potential available on the date of execution, the
authority has to ascertain the FSI available on the date on which
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the instrument was executed. The review was required because
that exercise had not been carried out by the authority.
80. Therefore, the question in the present case is not whether
the revenue under Clause 7.1 would be received on 18 February
2014. The fact that an agreed revenue-sharing consideration is
payable at a later date does not take it outside Section 2(na) of the
Maharashtra Stamp Act. The real question is whether, on a proper
reading of Clause 7.1 along with the Agreement as a whole, the
entitlement to 35% of the Gross Revenues was agreed
consideration for the development rights granted on 18 February
2014, or whether that entitlement depended upon some separate
condition which had not become operative on that date.
81. In Kolte Patil, the answer came from the terms of the
development agreement. The owners had granted the developer an
absolute right to develop the property, construct buildings and sell
the constructed units. The Agreement provided that the
consideration for that transfer would be the specified share of
gross sale proceeds. The Court therefore treated the revenue-
sharing provision as consideration even though payment was
deferred until the units were sold.
82. The arrangement in the present case requires a closer
examination. Clause 7.1 does not state that VPPL would from the
date of execution receive 35% of all Gross Revenues arising from
the entire development as consideration for the development
rights granted under the Agreement. The clause concerns Alternate
Vertical Premises and operates with reference to the options,
notices, and consequences provided in that clause. The 35%
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entitlement has to be understood with reference to the
circumstances to which Clause 7.1 applies.
83. Where a provision provides for deferred consideration, the
consideration does not cease to be consideration merely because
payment is postponed. But where a provision creates an
entitlement only after a specified future event or exercise of an
option, the Court has to see whether that event had occurred or
the option had been exercised on the date of execution. The mere
existence of a future arrangement cannot make a possible future
entitlement a present consideration for the whole transaction.
84. On reading the Agreement as a whole, I find that Clause 7.1
does not make VPPL unconditionally entitled, from 18 February
2014, to 35% of all Gross Revenues arising from the entire
development. The clause is concerned with the Alternate Vertical
Premises and operates through the options provided therein. The
35% entitlement must be confined to those circumstances in which
Clause 7.1 makes the revenue-sharing obligation operative.
85. It follows that the State could not treat every future sale
contemplated under the Agreement and every future revenue
which may arise from such sale as consideration for the grant
merely by referring to Clause 7.1. Before doing so, the authority
had to identify the particular right which was being valued and
show that the corresponding revenue-sharing entitlement
constituted consideration for that right as on the date of execution.
The consideration cannot be enlarged beyond what the Agreement
provides. At the same time, it would be incorrect to hold that
Clause 7.1 has no relevance because the revenue is receivable in
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future. If the 35% Gross Revenue entitlement is consideration for
development rights which were presently granted, then the fact
that payment is deferred would not prevent it from being taken
into account under Section 2(na). In that event, it would have to
be computed as on 18 February 2014 with reference to the
development potential and FSI available on that date and the
applicable ASR.
86. The development rights in the Second Schedule land and the
additional rights which depended upon the Swap Notice cannot be
included merely because the Agreement contemplated that such
rights could become available. If those rights were to arise only
upon the event contemplated under the Agreement, they were not
part of the present development rights on 18 February 2014.
Revenue, if any, attributable exclusively to such later rights cannot
therefore be used to enlarge the consideration for the rights which
were granted on the date of execution.
87. The development potential used for computing deferred
consideration must be the development potential available on the
date of execution. The authority cannot proceed on an uncertain
development potential. Therefore, even where Clause 7.1 is
required to be taken into account, the computation cannot be
based upon FSI or development potential which was not available
on 18 February 2014. I therefore find that the proper approach is
neither to exclude Clause 7.1 merely because the revenue
contemplated under it is deferred, nor to include the whole
projected future revenue as present consideration without
examining the conditions governing the entitlement. First, the
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development rights presently granted have to be identified. Then it
has to be determined whether the 35% Gross Revenue entitlement
under Clause 7.1 is consideration for those rights. If it is so, that
consideration has to be computed as on the date of execution on
the basis of the development potential and FSI available on that
date. This finding does not mean that every subsequent receipt of
revenue under Clause 7.1 would become a fresh consideration for
the Agreement. The stamp liability of the instrument has to be
determined with reference to the rights and consideration forming
part of that instrument on the date of its execution. A later
transaction or instrument may attract stamp duty if it falls within a
charging provision of the Maharashtra Stamp Act. But the
subsequent actual receipt of revenue cannot by retrospectively
enlarge the subject matter or consideration of the Agreement.
88. The above approach is in line with the strict manner in
which a fiscal statute relating to stamp duty has to be applied. The
liability has to be found from the statutory provision and from the
instrument. A consideration which the parties did not make
payable cannot be introduced into the Agreement. Equally, a
consideration which the Agreement makes payable cannot be
excluded only because its payment is postponed.
89. I accordingly hold that Clause 7.1 cannot be treated as an
independent basis for adding the value of all future revenue from
the contemplated development to the value of the development
rights transferred on 18 February 2014. Its effect has to remain
within the entitlement which was operative on that date. At the
same time, if any part of the 35% Gross Revenue entitlement
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constituted consideration for the development rights granted, that
part cannot be excluded only because payment was deferred. The
valuation has, in either case, to proceed on the rights existing on
the date of execution and on the FSI and development potential
available on that date.
Parking:
90. The calculation of parking has to follow the area which could
and be developed at the relevant time. Parking cannot be
calculated by taking development area which depends upon the
future Swap or future additional development potential. Once the
298 acres forming the First Schedule development rights are
treated as the presently relevant land, the contingent development
rights in the Second Schedule are excluded from the initial
valuation, the FSI is confined to what was available on the date of
execution and the carpet area is converted by the applicable 1.2
factor, the parking requirement has to be worked out on that
reduced and presently available development area. The figure of
3,383 parking spaces adopted by the authority proceeds on an area
base which includes additional development potential and area
which cannot be treated as presently available on 18 February
2014. The same defect which affects the valuation therefore affects
the parking calculation.
Whether the Swap arrangement was an attempt to evade stamp
duty:
91. I have considered the submission that the Swap mechanism
was inserted only for keeping the 50.23 acres outside the valuation
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and thereby avoiding stamp duty. I am unable to accept that
submission on the material before the Court.
92. A provision cannot be treated as an attempt to evade stamp
duty merely because it makes a future transfer of development
rights dependent upon a stated event. It has to be examined
whether the contingency is genuine or whether it is only a form
used for concealing a transfer which had in substance taken place.
In the present case, the Agreement provides different
consequences depending upon whether the Swap Notice is issued.
Clause 6.1 gives the option to VPPL. Clause 6.2 provides that the
consequences follow upon the Swap Notice. Clause 6.3 requires
steps, including execution of the NOC and other documents, once
the Swap Notice is issued. These provisions show that the parties
contemplated an actual change in their rights upon the later event.
The structure therefore does not support the submission that the
Second Schedule land had become an unconditional development
asset of WADHWA on the date of execution. There are present
rights under the Agreement, including possession, development
authority and the irrevocable Power of Attorney. Those rights are
sufficient to attract the appropriate stamp consequences under
Article 5(g-a)(i). But those features do not permit a separate future
right in the Second Schedule land to be treated as if it had
matured on 18 February 2014.
93. The proper conclusion is therefore that the Swap clause is a
genuine mechanism having relevance for stamp valuation. Its mere
existence or postponement of the Second Schedule development
rights cannot, without sufficient material, be treated as an attempt
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to evade stamp duty.
The subsequent Swap, if exercised:
94. The question then arises as to what would happen if the
Swap is exercised. That issue does not alter the question of
valuation of the Second Schedule rights under the Agreement. It is
relevant because it shows that exclusion of those rights from the
2014 valuation does not mean that the State loses its power to levy
duty if a later chargeable transaction takes place. If VPPL issues the
Swap Notice contemplated by Clause 6, the consequences provided
in Clauses 6.1 to 6.3 would come into operation. WADHWA would
then become entitled to development rights in the VPPL Horizontal
Development Land and the parties would have to execute the
documents contemplated under the Agreement. At that stage, the
competent Stamp Authority can examine the instrument through
which the later right is transferred. The applicable Article and
market value can then be determined with reference to the law
applicable to that later instrument and to the rights which have
become operative at that time. Such later levy is different from
retrospectively increasing the value of the Agreement by assuming
that the Swap was certain to take place. The State has power to
levy duty upon a later chargeable transaction. That does not mean
that the later transaction can be treated as a completed transfer for
the purpose of the 2014 valuation.
95. This answers the question that otherwise the structure would
result in loss of stamp revenue. The Stamp Act can operate at the
proper stage when the later chargeable instrument or transaction
comes into existence. What cannot be done is to bring that later
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stage into the earlier valuation.
Article 5(g-a)(i) and valuation under the Stamp Act:
96. I now consider whether the valuation adopted by the
authority can still be sustained under the Maharashtra Stamp Act.
97. Article 5(g-a)(i) covers an instrument relating to giving
authority or power to a promoter or developer for "construction",
"development" or "sale or transfer" of immovable property and
provides for duty at the same rate as applicable to a conveyance on
the market value of the property. Thus, the Petitioners cannot
contend that merely because some rights under the Agreement
were contingent, the document becomes only a nominally stamped
executory agreement. The Agreement created development rights
and authority upon execution. The statutory charge under Article
5(g-a)(i) is therefore attracted. The Petitioners are correct to the
extent that the reference to conveyance-level duty does not give
the authority an unrestricted power to determine market value on
hypothetical assumptions. The expression "market value" has to be
applied to the property and rights which form the subject matter of
the instrument on the relevant date. The Stamp Authority was
therefore required to identify the development rights which were
presently transferred, take the FSI available on 18 February 2014,
apply the proper ASR conversion method, distinguish construction
consideration from sale consideration and exclude future
contingent rights unless those rights were presently operative.
98. On the material before the Court, the impugned valuation
does not maintain these distinctions. The authority has combined
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presently available and future contingent development potential,
applied a higher area conversion factor, used the sale rate in place
of the construction value for the construction component, treated
the revenue-sharing provision without sufficiently separating its
conditions, and consequently increased the parking component.
The authority was therefore entitled to undertake valuation of the
Agreement for stamp purposes, but the particular method adopted
for arriving at the impugned valuation cannot be sustained.
99. I, therefore, record my conclusions on the points which arise
for consideration.
(i) Upon execution of the Agreement, WADHWA acquired
present development rights in the land then forming VPPL
Land, including the First Schedule land, together with
possession for development, construction and
implementation rights, authority relating to approvals and
the substantial powers contained in the irrevocable Power of
Attorney. These were present rights and were liable to be
considered for stamp duty;
(ii) The development rights in the First Schedule land were
immediately available. The rights in the Second Schedule
land were not available in the same manner. Their operative
development rights depended upon the Swap mechanism;
(iii) The Swap Notice under Clause 6 was an option given
to VPPL and not to WADHWA. Upon VPPL giving the Swap
Notice, Clause 6.2 brought the development rights into
operation. The Swap Notice was therefore a trigger for the
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Second Schedule rights;
(iv) The 50.23 acres covered by the Second Schedule could
not be valued in the stamp valuation of 18 February 2014 as
if the development rights in that land had vested in
WADHWA. The future possibility could be recognised, but
the final development value of such rights could not be
brought into the present valuation merely by assuming that
the Swap would take place;
(v) The FSI available for the relevant G-1 Special Township
development on the date of execution was 0.50 and not
0.10. The Agreement consistently refers to 0.5 FSI for the
VPPL Horizontal Development Land;
(vi) The authority could not adopt a future FSI which was
not available on the date of execution. Future development
potential had to remain future unless and until it became
and presently available;
(vii) The 1.2 factor is the appropriate conversion factor for
the present stamp valuation exercise. The 1.5 factor used for
expressing "Saleable Area" in the Agreement cannot be
treated as the ASR conversion factor merely because it is
mentioned in the contract;
(viii) In relation to the construction component, the
construction value, approximately corresponding to Rs.8,500
per sq. metre, had to be kept separate from the residential
sale rate of approximately Rs.24,000 per sq. metre;
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(ix) The revenue-sharing provision in Clause 7.1 cannot be
excluded from consideration merely because the actual
revenue is receivable in future. Deferred revenue sharing can
constitute consideration. However, Clause 7.1 has to be
examined according to its own terms. Only to the extent the
35% Gross Revenue entitlement constitutes consideration for
the development rights presently granted can it be taken into
account under Section 2(na). The valuation must remain
confined to the rights and premises to which that entitlement
relates on the date of execution. Rights dependent upon the
subsequent Swap Notice cannot be included merely by
assuming that the event would occur;
(x) The parking calculation had to be based upon the
development area available under the Agreement and the
law on the date of execution;
(xi) Article 5(g-a)(i) applies to the Agreement because it
relates to giving authority and power to a developer for
construction and development of immovable property;
(xii) The valuation method adopted by the authority cannot
be sustained. It has treated future and contingent rights as
present rights, adopted an incorrect area conversion, failed
to maintain the required distinction between construction
consideration and sale value, and proceeded upon a revenue-
sharing and parking computation without confining the same
to the rights and development potential relevant on 18
February 2014.
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100. In view of the foregoing discussion and for the reasons
recorded hereinabove, the following order is passed:
i) The Petition is allowed in the above terms;
ii) The order dated 19 March 2016 passed by the
Collector of Stamps, Raigad, and the appellate order dated
12 July 2016 passed by the Deputy Inspector General of
Registration and Deputy Controller of Stamps, Konkan
Division, Thane, are quashed and set aside to the extent they
determine the market value and stamp duty on the basis of
the valuation method discussed and rejected in this
judgment;
iii) It is declared that, for the purpose of stamp
adjudication of the Agreement for Joint Development
bearing Instrument No. Panvel-3/1009/2014, the rights
created and available on the date of execution shall alone
form the basis of valuation, subject to the provisions of the
Maharashtra Stamp Act, 1958;
iv) The 298 acres covered by the First Schedule shall be
treated as forming part of the arrangement created by the
Agreement on the date of its execution;
v) The 50.23 acres covered by the Second Schedule shall
not be treated as a presently transferred development right
for the purpose of valuation on the date of execution. Its
inclusion was dependent upon the issuance of the Swap
Notice in accordance with the Agreement;
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vi) The Swap Notice shall be treated as an existing option
in favour of VPPL. The additional development rights and
the corresponding rights in the Second Schedule land arising
upon exercise of that option shall not be treated as having
vested on the date of execution when the Swap Notice had
not been issued;
vii) The Additional Vertical Entitlement, to the extent it
was dependent upon the issuance of the Swap Notice or
upon any future increase in FSI, shall not be included in the
market value as an existing development entitlement on the
date of execution;
viii) The FSI available for the operative development rights
on the date of execution shall be taken for valuation. The
authority shall not adopt a future or contingent FSI merely
because such FSI was contemplated by the Agreement or
could become available upon the happening of a future
event;
ix) The conversion factor applicable for converting carpet
area for the valuation shall be the factor prescribed by the
applicable ASR method. The factor of 1.2 shall be applied for
such conversion. The contractual use of the factor of 1.5 for
determining "saleable area" shall not be treated as the
statutory ASR conversion factor;
x) The construction component shall be valued on the
construction basis applicable under the Agreement and the
applicable ASR Guidelines. The construction rate of
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Rs.8,500/- per sq. mtr., as accepted in the appellate order,
shall be applied and the rate of Rs.24,000/- per sq. mtr. shall
not be applied as a construction rate;
xi) The revenue-sharing method shall not be treated as
consideration for valuation where the conditions necessary
to bring that mode into operation had not occurred on the
date of execution;
xii) The parking requirement shall be recalculated on the
basis of the development area and construction entitlement
operative on the date of execution. The figure of 3,383
parking spaces, which proceeds on the Swap Notice scenario,
shall not be adopted. The no-Swap position, namely 1,750
parking spaces, shall be taken as the basis;
xiii) The competent authority shall undertake a fresh
determination of the market value of the instrument in
accordance with the above findings and the applicable
provisions of the Maharashtra Stamp Act, 1958, the
Maharashtra Stamp (Determination of True Market Value of
Property) Rules, 1995 and the applicable ASR Guidelines;
xiv) While undertaking such fresh determination, the
competent authority shall identify each component of the
valuation and shall give reasons for accepting or rejecting
the material submissions made by the parties;
xv) The competent authority shall thereafter determine the
stamp duty payable under the applicable provision of Article
5(g-a) of Schedule I of the Maharashtra Stamp Act, 1958,
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after giving due credit for the stamp duty paid by the
Petitioners;
xvi) The fresh determination shall be made as expeditiously
as possible and preferably within a period of twelve weeks
from the date on which a copy of this order is placed before
the competent authority;
xvii) Until the fresh determination is made and for period of
eight weeks thereafter, if the order is adverse, no coercive
steps shall be taken against the Petitioners pursuant to the
impugned orders;
xviii) The Petition is disposed of in the above terms. There
shall be no order as to costs.
(AMIT BORKAR, J.)
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