SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.

Page 1 Monday, August 05, 2024

Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

2023 SCC OnLine Bom 540 : (2023) 3 AIR Bom R 650

In the High Court of Bombay

(BEFORE G.S. PATEL AND NEELA GOKHALE, JJ.)

Writ Petition No. 4575 of 2022

Adityaraj Builders … Petitioner;
Versus
State Of Maharashtra, through Government Pleader
and Others … Respondents.
With
Writ Petition No. 4609 of 2022
Adityaraj Builders … Petitioner;
Versus
State Of Maharashtra, through Government Pleader
and Others … Respondents.
With
Writ Petition No. 4580 of 2022
Adityaraj Builders … Petitioner;
Versus
State Of Maharashtra, through Government Pleader
and Others … Respondents.
With
Writ Petition (L) No. 32182 of 2022
Vaibhavlaxmi Builders & Developers and Others …
Petitioners;
Versus
State Of Maharashtra, through Government Pleader
and Others … Respondents.
With
Writ Petition (L) No. 28336 of 2022
Vaibhavlaxmi Builders & Developers … Petitioner;
Versus
State Of Maharashtra, through Government Pleader
and Others … Respondents.
With
Writ Petition (L) No. 13608 of 2022
Vaibhavlaxmi Builders & Developers … Petitioner;
Versus
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 2 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

State Of Maharashtra, through Government Pleader

and Others … Respondents.
With
Writ Petition (L) No. 13295 of 2022
Varad Vastu Enterprises … Petitioner;
Versus
State Of Maharashtra, through Government Pleader
and Others … Respondents.
With
Writ Petition (L) No. 24539 of 2022
With
Interim Application No. 5166 of 2022
In
Writ Petition (L) No. 24539 of 2022
Vaishali Kawa and Others … Petitioners;
Versus
State Of Maharashtra, Through the Ministry of
Revenue & Forest and Others … Respondents.
With
Writ Petition (L) No. 41143 of 2022
Juhu Chandan Co-operative Housing Society
Limited and Others … Petitioners;
Versus
State of Maharashtra, through the office of the
Government Pleader and Others … Respondents.
Writ Petition No. 4575 of 2022, Writ Petition No. 4609 of 2022,
Writ Petition No. 4580 of 2022, Writ Petition (L) No. 32182 of
2022, Writ Petition (L) No. 28336 of 2022, Writ Petition (L) No.
13608 of 2022, Writ Petition (L) No. 13295 of 2022, Writ Petition
(L) No. 24539 of 2022, Interim Application No. 5166 of 2022, Writ
Petition (L) No. 24539 of 2022, and Writ Petition (L) No. 41143 of
2022
Decided on February 17, 2023
Advocates who appeared in this case:
For the petitioner : Mr. Dharam Sharma, i/b Jayesh Jain.
For respondent no. 4-society : Mr. Sachin Chowdhari.
For respondent-State : Mrs. Jyoti Chavan, AGP.
Amicus : Mr. Samit Shukla, with Siddharth Shah, Anjali Shah & Anuj
Sarla.
For the petitioner : Mr. Dharam Sharma, i/b Jayesh Jain.
For respondent no. 4-society : Mr. Sachin Chowdhari.
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 3 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

For respondent-State : Mrs. Jyoti Chavan, AGP.

For the petitioner Mr. Dharam Sharma, i/b Jayesh Jain.
For respondent no. 4-society : Mr. Sachin Chowdhari.
For respondent-State : Mrs. Jyoti Chavan, AGP.
For the petitioners : Mr. Ashraf Diamondwala, i/b Vis Legis Law
Practice.
For respondent-State : Mr. Hemant Haryan, AGP.
Amicus : Mr. Samit Shukla, with Siddharth Shah, Anjali Shah & Anuj
Sarla.
For the petitioner : Mr. Ashraf Diamondwala, i/b Vis Legis Law
Practice.
For respondent-State : Mr. Kedar Dighe, AGP.
Amicus : Mr. Samit Shukla, with Siddharth Shah, Anjali Shah & Anuj
Sarla.
For the petitioner : Mr. Ashraf Diamondwala, i/b Vis Legis Law
Practice.
For respondent-State : Mr. Hemant Haryan, AGP.
Amicus : Mr. Samit Shukla, with Siddharth Shah, Anjali Shah & Anuj
Sarla.
For the petitioner : Mr. Dharam Sharma, i/b Jayesh Jain.
For respondent-State : Mr. Kedar Dighe, AGP. State
Amicus : Mr. Samit Shukla, with Siddharth Shah, Anjali Shah & Anuj
Sarla.
For the petitioners : Mr. S. Murthy, i/b Abhishek Patil.
For respondent no. 5 : Ms. Deepti, with Abhishek Nikharge, i/b Mehul
Shah.
For respondent-state : Mr. Kedar Dighe, AGP.
Amicus : Mr. Samit Shukla, with Siddharth Shah, Anjali Shah & Anuj
Sarla.
For the petitioner Ms. Neha Shah, i/b Dhiren Shah.
For respondent-state : Mr. Himanshu Takke, AGP.
Amicus : Mr. Samit Shukla, with Siddharth Shah, Anjali Shah & Anuj
Sarla.
The Judgment of the Court was delivered by
G.S. PATEL, J.:— These Petitions all raise a common question of law
under the Maharashtra Stamp Act 1958. All of them relate to Stamp
Duty sought to be levied on what are called Permanent Alternate
Accommodation Agreements (“PAAA”). Typically, these are executed
by a developer with individual members of housing societies or other
persons already in occupation and whose houses are being redeveloped.
As we shall presently see, these agreements follow a pattern. The
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 4 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

society enters into an agreement, often called a Development

Agreement (“DA”) or a Redevelopment Agreement with a developer.
That DA has two parts. One part is the construction of new homes for
existing society members or occupants. The second part is the
construction of what are called free sale units which the developer can
put to sale in the open market. Sometimes, but not always, individual
society members also sign the DA. Equally, there are many cases where
the society executes the DA with the developer, but individual
members do not. Those individual members are still members of the
society and the society acts on their behalf.
2. There is no dispute that the DA is to be stamped. The issue is the
demand by the stamp authority that the individual PAAAs for members
or existing occupants must also be stamped on a value reckoned at the
cost of construction. This overlooks a fundamental aspect, viz., that
existing members and occupants are not in any sense ‘purchasers’ of
the areas to which they are entitled in law on reconstruction. This may
be an area equivalent to what they earlier occupied or, by operation of
law, maybe slightly more. If a society member or occupant purchases
from the developer any additional area, then again it is not contentious
that this additional area purchased by a member must be assessed to
stamp duty. The Petitioners all make the point that so far as the
existing area (or the area to which the members are entitled) is
concerned, there is in fact no “purchase” at all. They are being provided
new accommodation in lieu of earlier accommodation. In any case, the
DA has already been stamped and covers all tenements or units to be
constructed for the purposes of individual members of the society.
There can be no question of stamping or of a levy of stamp duty twice
for the same transaction. The other argument also raised is that for the
purposes of the stamp, the PAAA is never independent of the DA. There
are other dimensions to this argument which we will consider shortly.
th
3. On 9 December 2021, in Writ Petitions now numbered as Writ
Petition No. 4575 of 2022, Writ Petition No. 4609 of 2022 and Writ
Petition No. 4580 of 2022, we issued Rule and then made the following
order.
“1. Rule in all three Petitions.
2. The Petitions raised a question about the interpretation of validity
rd th
of two circulars dated 23 June 2015 and 30 March 2017 issued
by the Inspector General of Registration and Controller of Stamps,
Maharashtra State.
3. The issue will affect a large number of redevelopment projects
across the State because it pertains to the stamp duty that is
correctly payable on instruments typical in such projects. In
Mumbai, in particular, redevelopment by societies will be affected.
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 5 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

4. The Petitioners have an estimated stamp duty liability adjudicated

at about Rs. 27 lakhs in each of the three Writ Petitions. They will
be required to deposit 50% of the amount in each matter. Subject
to that deposit being made by 3rd January 2022 and on the
further undertaking, which we accept, to pay the balance if found
due by this Court and if the Petitions fail, we permit the
Petitioners to proceed with registration of the permanent alternate
accommodation agreements in the form proposed.
5. The Sub-Registrar of Assurances and the Collector of Stamps will
permit the registrations of the documents in question without
insisting on payment of the adjudicated stamp duty liability. The
deposit in Court is a pre-condition to registration. The Petitioners
will have to place before the Sub-Registrar an authenticated copy
of this order and proof of the deposit/s having been made. No
registration is permitted unless and until the deposit/s are made.
6. If the deposits are not made by 3rd January 2022, this interim
protection will cease without further reference to the Court and
the Petitioners will not be entitled to have any of the documents
registered.
7. The Sub-Registrar of Assurances and the Collector of the Stamps
will act on production of an authenticated copy of this order.
8. Were quest Mr. Samit Shukla who is present in Court to assist as
Amicus. We also request him to brief counsel of his choice and if
possible, either Mr. Mayur Khandeparkar or Mr. Karl Tamboly, each
of whom has considerable experience in such matters.
9. Respondent Nos 1 to 3 waive service. So far as Respondent No 4
is concerned, we permit private service by courier.
10. Given the fact that the issue is relatively narrow but is likely to
have a significant impact, we will give the matter priority and we
list it for final disposal on 3rd February 2022.
11. All concerned will act on production of a digitally signed copy of
this order.”
4. Other Writ Petitions raising identical challenges came to be filed.
Similar interim reliefs then came to be granted in the other matters.
We have today heard learned Counsel, including Mr. Shukla who
appears as Amicus at our request. He has given us a compilation
including some judgments to which we will refer a little later in this
judgment.
5. One significant concern, as Mr. Shukla points out, is that
whenever this Court has pronounced the law on similar aspects relating
to stamp, it is found that the stamp authorities choose to see that
decision as being confined to the facts of that case. They then proceed
to make the same demand again. This results in more petitions being
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 6 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

filed in this Court, all revisiting laws already settled and decided. We
deprecate this approach. For this reason, while we begin this judgment
with a very short summary of the facts in each case, our interpretation
of the law is not confined to the facts of these cases. This is also why
we have in the very first paragraph of this judgment set out the general
principle to which we address ourselves.
THE IMPUGNED CIRCULARS
6. On 4th June 2013, the State Government issued a circular that
stamp duty would be chargeable on these PAAAs. The value would be
computed on the basis of the costs of construction of the flats and the
market value of the additional area if any. As we noted earlier, we are
not concerned with the additional area stamp duty.
7. On 7th November 2013, the Chief Controlling Revenue Authority of
the Maharashtra State issued a circular with guidelines for charging
stamp duty on PAAAs. This said that the stamp duty would be
computed on the costs of construction of the retained area. Where
fungible FSI was used, stamp duty would be computed on the
construction cost and the premium paid on the fungible area.
8. On 23rd June 2015, came the impugned circular from the Chief
Controlling Revenue Authority. A copy of this is at Exhibit “A” and “A1”
at pages 35 and 47 of Writ Petition No 4575 of 2022. This circular
makes a distinction between what is called the cooperative society and
the ‘owners’, meaning the members of the Society. The impugned
circulars contemplate that any PAAAs between the Society members
and the developer is different from the DA between the Society and the
developer. Specifically, and this is the beginning of the problem that we
noted earlier, this circular seeks to distinguish, in our view quite
impermissibly for the reasons that follow, the Division Bench judgment
of this in Prabha Laxman Ghate v. Sub-Registrar and Collector of
1 th
Stamps . We will consider that decision later. On 30 March 2017, the
Chief Controlling Revenue Authority came out with a clarificatory
circular. This is at Exhibit “A1” to Writ Petition No 4575 of 2022 at page
39. A translation is also annexed. This clarificatory circular purports to
specify criteria that must be complied with and goes on to specify that
only on such compliance PAAAs with individual society members would
be treated as documents incidental to the DA, attracting the application
of Section 4 of the Stamp Act. This ‘clarificatory’ circular purports to say
that compulsorily individual society members must join in the
execution of the original DA, i.e., that every single society member
must countersign the DA and that the DA is thus not just bipartite or
tripartite but if there is such a word, multipartite. The submission of
course is that it is no part of the business of the Revenue Authority to
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 7 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

specify the form of legally binding documentation.

9. The challenge in most of the Petitions is to both circulars, i.e., the
circulars of 23rd June 2015 and 30th March 2017.
INDIVIDUAL PETITIONS
10. WRIT PETITION NO. 4575 OF 2022 (Adityaraj Builders-1,
th
Petition No. 1): The Petition relates to a DA dated 19 April 2012 with
th
the 4 Respondent, the Tagore Nagar Suyog CHSL at Vikhroli. A stamp
duty of Rs. 8,32,450.00 was paid on this DA under Article 5(g-a) of the
Maharashtra Stamp Act 1958. This DA was followed by a set of
Tripartite Agreements for PAAA between Adityaraj Builders, the Society
and individual members. These Tripartite Agreements are related to the
allotment of self-contained apartments of a carpet area of 484 sq ft.
This area followed the applicable MHADA policy, guidelines and circulars
and those of the State Government relating to redevelopment in such
cases.
11. WRIT PETITION NO. 4609 OF 2022 (Adityaraj Builders-2,
Petition No. 2): This Petition is also by Adityaraj Builders. It also
relates to the Tagore Nagar Manoranjan CHSL. Otherwise, the facts are
th
identical. The DA here is dated 26 November 2015 and this was
similarly followed with PAAAs with individual members. Stamp duty
was paid on the main Agreement of Rs. 50,87,400.00. Further stamp
duty was paid on the Supplementary Agreement is Rs. 88,580.00.
12. WRIT PETITION NO. 4580 OF 2022 (Adityaraj Builders-3,
Petition No. 3) is between Adityaraj Builders and the Tagore Nagar
th
Saiprasad CHSL. The DA here is of 26 November 2015 and this was
followed with PAAAs with individual members. Stamp duty was paid on
the main Agreement of Rs. 44,02,100.00. Further stamp duty payable
on the Supplementary Agreement is Rs. 85,725.00.
13. WRIT PETITION (L) NO. 32182 OF 2022 (Vaibhav Lakshmi
Builders & Developers-1, Petition No. 4) is between Vaibhav Laxmi
Builders & Developers and the Chembur Crystal CHSL at Chembur,
th
Mumbai. The DA here is 15 March 2007 and this was followed with
PAAAs with individual members. Stamp duty payable or paid on the
main Agreement is Rs. 1,16,335.00. Further stamp duty on the
Supplementary Agreement is Rs. 1,39,830.00.
14. WRIT PETITION (L) NO. 28336 OF 2022 (Vaibhav Lakshmi
Enterprises-2, Petition No. 5) is by Vaibhav Laxmi Builders. The
society is the Kannamwar Nagar Kranti CHSL. The DA is dated 20th
December 2010 and the stamp duty paid is Rs. 23,06,700.00.
15. WRIT PETITION (L) NO. 13608 OF 2022 (Vaibhav Lakshmi
Developers-3, Petition No 6) is a third Petition by Vaibhav Laxmi
Developers. The society is the Kannamwar Muktidham CHSL. The DA is
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 8 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

of 20th June 2012 and the stamp duty paid is Rs. 24,64,100/-.
16. WRIT PETITION (L) NO. 13295 OF 2022 : (Varad Vastu
Enterprises, Petition No. 7) is by Varad Vastu Enterprises. The
society is the Tilak Nagar Lok Seva CHSL in Chembur. The DA here is of
3rd November 2006. There was a Supplementary Agreement of 26th
September 2012. Stamp duty was paid on the main Agreement of Rs.
3,36,590.00. Further stamp duty paid on the Supplementary
Agreement was Rs. 13,43,550.00.
17. WRIT PETITION (L) NO. 24539 OF 2022 (Konark Shakti,
Petition No. 8) is by two individuals and the developer, Konark Shakti.
The society is the Lijjat Godawari CHSL and the development is at
th
Kandivali (West). The DA in question is of 20 July 2016. Stamp duty
was paid on the DA of Rs. 1,47,43,300.00 followed by a PAAAs.
18. WRIT PETITION (L) NO. 41143 OF 2022 (Kabra Estates,
Petition No. 9) is filed by the Juhu Chandan CHSL, the developer
Kabra Estate and Investment Consultant, and a partner of Kabra
th
Estates. The Redevelopment Agreement is of 9 May 2016. The
Society's property is at Ville Parle (West). The stamp duty paid or
payable is Rs. 1,85,92,600/-.
GENERAL DIRECTIONS
19. All Writ Petitions that are on a stamp number are to be finally
th
numbered with objections removed by 6 March 2023.
20. In all Petitions where Rule has not been issued, Rule is hereby
issued. Respondents waive service. Rule is made returnable forthwith
and all Petitions are taken up for hearing and final disposal.
21. Ms Chavan for the State Government tells us that there is an
Affidavit in Reply filed by the State Government on the legal aspects in
Writ Petition 2310 of 2016. We are surprised that the 2016 Petition
which was admitted has never been sought by the Government to be
tagged or listed with this group. That is now really no longer our
concern since this group has been listed before us several times.
Obviously, the 2016 Petition at least to the extent to the question of
law will be covered by the present Petition. In any case, the 2016
Petition is or must be overtaken by subsequent events because these
Petitions all pertain to the clarificatory circular of 30th March 2017 as
well. For whatever it is worth we will treat that Affidavit in Reply on law
as an Affidavit in Reply to all these Petitions.
ANALYSIS AND FINDINGS
22. First, we set out the provisions of Article 5(g-a) of The
Maharashtra Stamp Act 1958:
Description of Instrument Proper Stamp duty
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 9 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

1 2
5. AGREEMENT OR ITS RECORDS
OR MEMORANDUM OF AN
AGREEMENT—
(g-a) (i) if relating to giving The same duty as is leviable on a
authority or power to a promoter Conveyance under clauses (b) or
or a developer, by whatever name (c), as the case may be, of Article
called, for construction on, 25, on the market value of the
development of or, sale or property.
transfer (in any manner Provided that, the provisions of
whatsoever) of, any immovable section 32A shall, mutatis
property. mutandis, apply to such
agreement, records thereof or
memorandum, as they apply to
an instrument under that section:
Provided further that, if the
proper stamp duty is paid under
clause (g) or article 48 on a power
of attorney executed between the
same parties in respect of the
same property then, the stamp
duty under this article shall be
one hundred rupees.
(ii) if relating to the purchase of The same duty as is leviable on
one or more units in any scheme conveyance under clause (a), (b)
or project by a person from a or (c), as the case may be, of
developer: Article 25 on the market value of
Provided that, on conveyance of the unit.
property by the person, under an
agreement under this sub-clause
to the subsequent purchaser, the
duty chargeable for each unit
under this sub-clause shall be
adjusted against the duty
chargeable under Article 25
(conveyance) after keeping the
balance of one hundred rupees, if
such transfer or assignment is
made within a period of one year
from the date of the agreement.
If on adjustment, no duty is
required to be paid, then the
minimum duty for the conveyance
shall be rupees one hundred.
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 10 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

Explanation.— For the purposes of

this sub-clause, the unit shall
include a flat, apartment,
tenement, block or any other unit
by whatever name is called, as
approved by the Competent
Authority in the building plan.
23. The principal Article has been amended many times. As we can
see, it relates to every kind of Agreement or a record of an Agreement
or Memorandum of an Agreement. Our concern here admittedly is only
with sub-Clause (g-a). This has two sub-clauses, a proviso and an
explanation. For our purposes, it is sufficient to note that such an
Agreement is treated on par with a conveyance under Article 25 of the
Maharashtra Stamp Act 1958. There is no issue raised under Article 25,
so we need not reproduce it.
24. With this we turn to the provisions of the Stamp Act itself. The
Act was most recently amended in 2021. The relevant definitions are as
follows:
“2. In this Act, unless there is anything repugnant in the subject
or context,—
(d) “chargeable” means, as applied to an instrument executed
or first executed after the commencement of this Act, chargeable
under this Act and as applied to any other instruments,
chargeable under the law in force in the State when such
instrument was executed or, where several persons executed the
instrument at different times, first executed;
(g) “Conveyance” includes,—
(i) a conveyance on sale,
(ii) every instrument,
(iii) every decree or final order of any Civil Court,
(iv) every order made by the High Court under section 394 of
the Companies Act, 1956 or every order made by the
National Company Law Tribunal under sections 230 to 234 of
the Companies Act, 2013 or every confirmation issued by
the Central Government under sub-section (3) of section
233 of the Companies Act, 2013, in respect of the
amalgamation, merger, demerger, arrangement or
reconstruction of companies (including subsidiaries of parent
company); and every order of the Reserve Bank of India
under section 44A of the Banking Regulation Act, 1949 in
respect of amalgamation or reconstruction of Banking
Companies.
by which property, whet her moveable or immovable, or any estate or
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 11 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

interest in any property is transferred to, or vested in, any other

person, inter vivos and which is not otherwise specifically provided for
by Schedule I.
(h) “duly stamped” as applied to an instrument means that the
instrument bears an adhesive or impressed stamp of not less than
the proper amount and that such stamp has been affixed or used
in accordance with the law for the time being in force in the State.
(ja) “immoveable property” includes land, benefits to arise
out of land, and things attached to the earth, or permanently
fastened to anything attached to the earth.
(l) “instrument” includes every document by which any right or
liability is, or purports to be, created, transferred, limited,
extended, extinguished or recorded, but does not include a bill of
exchange, cheque, promissory note, bill of lading, letter of credit,
policy of insurance, transfer of share, debenture, proxy and
receipt.
Explanation.-The term “document” also includes any
electronic record as defined in clause (t) of sub-section (1) of
section 2 of the Information Technology Act, 2000.
(na) “market value” in relation to any property which is the
subject matter of an instrument, means the price which such
property would have fetched if sold in open market on the date
of execution of such instrument or the consideration stated in
the instrument, whichever is higher.”
25. Chapter II of the Act deals with stamp duties. Part (A) of
Chapter II is of direct concern and it deals with the liability of
instruments to duty, i.e., it deals with those instruments that are liable
to stamp. Section 3 specifies the class or classes of instruments that
are chargeable with duty:
“3. Instrument chargeable with duty
Subject to the provisions of this Act and the exemptions
contained in Schedule I, the following instruments shall be
chargeable with duty of the amount indicated in Schedule I as the
proper duty therefor respectively, that is to say—
(a) every instrument mentioned in Schedule I, which, not
having been previously executed by any person, is executed
in the State on or after the date of commencement of this
Act;
(b) every instrument mentioned in Schedule I, which, not
having been previously executed by any person, is executed
out of the State on or after the said date, relates to any
property situate, or to any matter or thing done or to be
done in this State and is received in this State:
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 12 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

Provided that a copy or extract, whether certified to be a

true copy or not and whether a facsimile image or otherwise
of the original instrument on which stamp duty is chargeable
under the provisions of this section, shall be chargeable with
full stamp duty indicated in the Schedule I if the proper
duty payable on such original instrument is not paid:
Provided further that no duty shall be chargeable in
respect of—
(1) any instrument executed by or on behalf of, or in favour
of, the Government in cases where, but for this
exemption, the Government would be liable to pay the
duty chargeable in respect of such instrument or where
the Government has undertaken to bear the expenses
towards the payment of the duty.
(2) any instrument for the sale, transfer or other disposition,
either absolutely or by way of mortgage or otherwise, of
any ship or vessel, or any part, interest, share or property
of or in any ship or vessel registered under the Bombay
Coasting Vessels Act, 1838, or Merchant Shipping Act,
1958.”
26. We are not concerned in this case with instruments executed
outside the State. For our purposes. the reference to Schedule I (which
contains the Articles including the ones that we set out above) is
sufficient. Then come Sections 4, 5 and 6. Each of these relates to
situations of what we will call multiplicity. Section 4 pertains to several
instruments relatable to a single transaction of development,
agreement sale, lease, mortgage. Section 5 deals with instruments that
relate to distinct matters. Section 6 is clarificatory and addresses itself
to instruments that come within different descriptions in Schedule I.
We reproduce Sections 4, 5 and 6:
“4. Several instruments used in single transaction of
development agreement, sale, lease, mortgage or settlement.
(1) Where, in the case of any development agreement, sale,
lease, mortgage or settlement, several instruments are
employed for completing the transaction, the principal
instrument only shall be chargeable with the duty
prescribed in Schedule I for the conveyance,
development agreement, lease, mortgage or settlement,
and each of the other instruments shall be chargeable
with a duty of one hundred rupees instead of the duty (if
any) prescribed for it in that Schedule.
(2) The parties may determine for themselves which of the
instruments so employed shall, for the purposes of sub-
section (1), be deemed to be the principal instrument
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 13 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

(3) If the parties fail to determine the principal instrument

between themselves, then the officer before whom the
instrument is produced may, for the purposes of this
section, determine the principal instrument:
Provided that the duty chargeable on the instrument so
determined shall be the highest duty which would be
chargeable in respect of any of the said instruments employed.
5. Instruments relating to several distinct matters or
transactions
Any instrument comprising or relating to several distinct
matters shall be chargeable with the aggregate amount of the
duties with which separate instruments, each comprising or
relating to one of such matters, would be chargeable under this
Act.
6. Instruments coming within several descriptions in
Schedule I
Subject to the provisions of section 5, an instrument so framed as
to come within two or more of the descriptions in Schedule I shall,
where the duties chargeable thereunder are different, be chargeable
only with the highest of such duties:
Provided that nothing in this Act contained shall render
chargeable with duty exceeding one hundred rupees a
counterpart or duplicate of any instrument chargeable with
duty and in respect of which the proper duty has been paid.”
(Emphasis added)
27. On a plain reading of the caption of Part (A) and the titles of
Sections 3, 4, 5 and 6, the one thing that is apparent, and this again is
not contentious in law, is that stamp duty is attracted by the
instrument.
28. Section 4(1) is the concept of what has been called in a different
branch of law, the “Master Agreement”. This is familiar to transactional
documentation in various kinds of commercial dealings. Examples
abound : there may be a two-part Leave and License Agreement, one
relating to the immovable property and the other to furniture and
fixtures. In arbitration law, this is even more familiar. There is a settled
line of authority from the Supreme Court that parties' attempts to avoid
arbitration by claiming segregation in separate Agreements has not
been permitted : see Chloro Controls India Pvt. Ltd. v. Severn Trent
Water Purification Inc2.
29. In the context of redevelopment and the rights of individual
members of a cooperative society, the law itself has been well settled in
different dimensions. There used to be an argument that individual
society members have rights independent of the society in dealing with
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 14 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

third parties. A Single Judge of this Court negatived that contention :

Aditya Developers v. Nirmal Anand CHSL3. This decision has been
followed consistently. A Division Bench of this Court, speaking through
AM Khanwilkar J, as he then was, in Girish Mulchand Mehta v. Mahesh S
4
Mehta specifically dealt with this argument where there were two sets
of agreements or dealings, one with the society and the other with
members, the members would have rights independent of the society.
That judgment was specifically in the context of a development
agreement with a society and separate agreements with members, and
a situation where members had not signed the DA. The Court held that
members were nonetheless bound by the terms of the DA (albeit for
the purposes of the arbitration act). There is a long line of authority in
this vein. We need not revisit it.
30. Whether in the context of arbitration and commercial law or in
cases of transactions between a developer and a society has now
evolved such that an agreement between an outsider and a society
binds members of the society. Conversely, an agreement with an
individual member is part and parcel of, included in, covered by or
subordinate to the principal DA between the society and the developer.
The situation is highlighted perhaps most dramatically when it comes
to arbitration clauses. These are to be found in DA between the society
and the developer. This was the case in Girish Mulchand Mehta when
the Court was told that the arbitration clause bound only the society.
Other provisions of the DA bound only the society. Because individual
members had not signed the DA, therefore they were not bound by the
arbitration agreement or certain other provisions of the DA. The Court
had not the slightest hesitation in repelling this argument.
31. Lest it be brought into question again, we take the opportunity
of now once again reaffirming Girish Mulchand Mehta in every single
aspect. We most respectfully are in accord with the entirety of its
findings.
32. This assessment of the law as pronounced by the Courts, fit
exactly with the statutory contemplation under Section 4(1) of the
Stamp Act, extracted above. The statute itself makes no distinction
between several instruments being used to “complete the transaction”.
All instruments are treated as one. The Section may not use the words
‘Master Agreement’ but the statutory intent is plain and unmistakable.
33. Is there a meaningful distinction to be made between the
society and its members in the context of a re-development by an
outsider (a developer)? What precisely is the relationship between a DA
by a developer with the society and PAAAs by the developer with the
members?
34. The distinction that there exists a juristic entity known as the
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 15 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

society even without its members is a submission that has only to be

stated to be rejected. A cooperative society without members is a
creature unknown to law.
35. This guides our approach to the needlessly nice distinction
sought to be made between a DA and a PAAA. In executing a DA, the
society acts for all its members - even those who may disagree,
because a society sometimes is run by majority. The PAAA may provide
for other matters such as bespoke questions of the amount of transit
rent, individual flat numbers, distinct flat sizes, and so on. But a PAAA
is only a particularisation per member of the redevelopment
contemplated by the DA itself. To view it differently, it is the society
that goes into re-development. This is governed by the DA. There can,
conceivably, be a DA without a single PAAA - for example by adding
pages and pages of annexures, one per member - but there can never
be society re-development only by PAAAs without a DA with the
society. It is, therefore, a distinction without a difference. The
segregation is merely one of convenience. It is done thus for simplicity,
clearer understanding. and ease of reference of all concerned.
36. For the purposes of Section 4(1), therefore, the entirety of PAAA
may be physically included in a DA. If that be done, then there is only
one Agreement covering the whole of the DA. Then the charging of
stamp duty by the stamp authority simply would not arise because
there is no method by which the stamp authority could levy stamp on
every annexure to a DA.
th
37. The requirement in the impugned clarificatory circular of 30
March 2017, that every member must also sign the DA suffers from two
vulnerabilities. Firstly, it is entirely beyond the jurisdictional remit of
the revenue authorities to dictate what form the instrument must take.
A revenue authority must take the instrument as he finds it. Secondly,
there is no concept in law of a society not representing the interests of
all its members. As we noted, societies are often accused of something
very close to mob rule because it is sheer brute force majority that
prevails in a society. As Tated J held in Aditya Developers, once a
person becomes a member of a society, and no one is ever compelled
to become a member of any society, he loses his individuality and is
subsumed within the identity of the society. Of course, there are often
disputes between a member and the society but those are to be
separately dealt under the Maharashtra Cooperative Societies Act by
the jurisdictionally competent authorities. This requirement by the
stamp office that unless a member personally signs the DA, Section 4
(1) is not attracted is a submission that is purely of the stamp
authorities’ or the state government's own invention. It is unanchored
to anything in law or, for that matter, logic.
38. Ms Chavan raises a question regarding the area, i.e., the square
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 16 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

footage of the redeveloped homes. She puts it like this. If a person

occupying 350 sq ft in the old building receives 350 sq ft in the new
building, then there is no question of additional stamp duty.
Unfortunately for Ms Chavan, the circulars in question do not make this
distinction at all. They treat every PAAA irrespective of the area as
effectively an instrument of purchase of new premises. That is plainly
wrong and cannot be sustained.
39. The next point that Ms Chavan makes is that sometimes by
operation of law, a member is entitled as of right to an additional area
over and above the area that he or she presently occupies. Under the
Development Control & Promotion Regulations 2034 (“DCPR”), and
extant policy of other authorities such as the Maharashtra Housing &
Area Development Authority regarding on cessed building
redevelopment, or in the case of society redevelopment, an additional
area is promised to existing occupants. Let us take one dramatic recent
example that of the massive redevelopment currently planned of the
BDD chawl at three locations in Mumbai. Every one of the existing
tenants/occupants has premises between 170 and 240 sq ft. They are
all promised, without any element of purchase, rebuilt homes of 500 sq
ft with built-in toilets and bathing facilities. It surely cannot be
suggested that these persons who are entitled to an enhanced area on
redevelopment by MHADA are deemed to be ‘purchasers’ of not only
the existing area but the increased area in their rebuilt homes. There is
no exemption from stamping that is pointed out to us for such
transactions. We do not see how the stamp authorities’ or State
Government's logic can be differentiated between a MHADA
redevelopment and a redevelopment privately between a society and a
developer.
40. There is a third element regarding square footage. Sometimes
the society member has the option of purchasing even further area. To
be clear, this means not only the inch-for-inch, square-feet-for-square-
feet area equivalent to what that member earlier occupied, and any
additional area permissible free under law, but, in addition, additional
area available to the project that any member may purchase for
valuable consideration. We noted at the beginning that none of the
Petitioners have any quarrel with the payment of stamp duty computed
on the third element, that is the purchase of free sale of additional area
added to members' rebuilt tenements. Every one of the societies,
developers and, in at least one case, individual society members accept
that they are liable to pay full stamp duty on that purchased additional
area. They also agreed that the stamp duty is to be reckoned for the
additional purchase area at market value and not at the cost of
construction.
41. The last argument on area, presented by Ms Chavan, is about
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 17 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

the concept of what is called “fungible FSI”. This is indeed a peculiar

concept in development law and it may not be appropriate to enter into
a larger discussion. It is enough to note that additional Floor Space
Index or buildability, or the right to put up more built-up area, is
available under the concept of fungible FSI. This is nothing but
additional FSI, over and above that permissible on the plot. It can be
purchased for what is called a premium. If the plot area is 2000 sq ft
and the permissible FSI is 3.0, the built-up area is 2000 × 3 = 6000 sq
ft. Additional FSI may be purchased at a premium. This is the ‘fungible’
FSI. How that fungible FSI is dealt with is a matter between the
Society (representing all members) and the developer. It is always the
subject matter of the DA. In some cases, the developer may agree to
make it available pro rata, free of cost to members. In some cases, the
developer and society may agree that members will have to pay for
additional fungible FSI. The amount of available fungible FSI is also
capped, and most DAs therefore require the builder - as part of the
consideration - to make this available free to members through the
society.
42. There can be no question of members having to pay stamp duty
on acquisition of additional built-up area or carpet area derived from
fungible FSI. The only stamp duty a member must pay is for any
additional area that she or he actually purchases for consideration.
43. The reason for this is self-evident. It takes us to the concept of
redevelopment to begin with. The society is the owner of the structure
and the land. It is the society that owns the property and the land.
Members have shares in the society. That membership allows them to
have occupancy rights for individual flats and use of certain parking
spaces, garages, common areas and facilities and so on. When a
member ‘sells’ her or his flat, she or he is actually selling membership
of the society. That is treated as a conveyance because the
membership, apart from the right to stand for and contest elections, is
the right to hold, occupy, possess and enjoy an immovable property.
The law earlier was, until it was clarified in the early 1980s by a Division
Bench of this Court, that a transfer of shares in a society did not attract
stamp as a conveyance. This Division Bench held that it did, and that
law has now for the last 35 years have been firmly settled. It is
impossible to argue that the land and building are not the property of
the society itself. In redevelopment, this means that it is the society
that has the right to all benefits on the land on redevelopment. This
includes any incentive FSI, additional FSI as permissible in law (and
possibly, if so agreed, fungible FSI as well). A society may not have the
means to carry out redevelopment on its own. It may just not have the
funds to engage a project management consultant, architect, and a civil
contractor. The DA comes into play because it is the developer who
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 18 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

bears the burden and costs of redevelopment. But consideration must

pass between the developer and the society. That consideration takes
the form of the society yielding or ceding to the developer in lieu of
cash consideration, and additional FSI benefits. This is the free-sale
component that is made available to the developer. This is the
consideration. The developer's obligation is to complete construction
and deliver possession (and of course to pay transit rent in the
meantime plus such amounts as may be negotiated between the
parties.) If what Ms Chavan says is correct, then this entire structure in
law is completely obliterated. A simple illustration will suffice. If a
society decides to undertake the redevelopment itself without
appointing a developer, but, instead, itself engages an architect, a
structural engineer and a contractor, it is clear that all benefits of
redevelopment will belong to and only to the society. Every member of
the society will be entitled to a larger flat on redevelopment. But there
will be no PAAA because it is the society that is doing the development
itself. Any additional FSI will be consumed by the society itself. Any
free-sale FSI will be available to the society and the society may itself
sell those free-sale flats (on which stamp duty will be paid at the
market rate). In that scenario, the principle being advocated by the
stamp authorities completely fails : it would mean that in society
redevelopment, there is no stamp duty payable in regard to the
redeveloped homes, but this duty is payable only when a developer
enters the picture. To put it even more bluntly : the developer is not
selling homes to society members on re-development. The only sale is
of any additional area that the member purchases. The rest is an
obligation to be performed by the developer in consideration of the
members, through their society, giving the developer the benefit of the
free-sale units.
44. We are concerned here with only one aspect : the redevelopment
of society buildings and premises. It does not matter how that
redevelopment takes place. From the perspective of a society member,
she or he is getting : (a) a home in replacement of a home; (b) a larger
home in replacement of a smaller home; and (c) the option of
purchasing additional area for the replacement home. It is only item (c)
that can ever be brought to stamp. Items (a) and (b) are never liable
to stamp.
45. The case of Prabha Ghate is interesting. That case also related to
stamp duty under Article 5(g-a), DAs and societies. The challenge dealt
with an amendment that came into from 7th February 1990 and a DA of
th
10 April 1995. In paragraphs 3 and 4 the Division Bench speaking
through FI Rebello J, as he then was, said:
“3. Having heard the learned Counsel for both the parties, the real
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 19 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

question is whether the petitioner is liable to pay tax on the

agreement either under Article 5(g-a) as amended or by treating the
document as a conveyance. Dealing with Article 5(g-a), it is clear
that the said Article applies only in respect of those agreements
th
which have come into effect from 7 February 1990. The amending
Act though published in the official gazette on 16th January 1997,
th
insofar as Article 5(g-a) came into force with effect from 7 February
1990. There is no dispute between the parties that the agreement in
question was before that date having been entered into on 10th April
1989. It is thus clear that insofar as the agreement in question is
concerned, no stamp duty was payable. Stamp duty, if at all, would
be payable only in respect of those agreements as set out under
th
Article 5(g-a) which are entered into on or after 7 February 1990.
This being not the case, in the present petition, the demand made
by the respondents even at the petitioner's request on that count is
liable to be set aside. Even assuming that the petitioner had
wrongfully applied, that, by itself, is no ground for the respondents
to insist on the petitioner paying stamp duty, if the same is not due
and payable according to law. The respondents, therefore, could not
call upon the petitioner to pay the stamp duty on agreement. The
demand by the respondents is clearly without jurisdiction.
4. The second contention of the respondents is that the
th
Agreement dated 10 April 1989 is a conveyance. Conveyance in law
would contemplate a transfer of the property or interest from one
person to another. In the instant case, on a perusal of the
agreement between the petitioner and the developer, it is
clear that there has been no transfer of property or interest in
property by the petitioner in favour of the developer. On the
contrary, all that is provided is that the developer shall
develop the property and reserve for the petitioner herein two
flats on the said property. The developer in turn was given the
right to sell FSI in respect of other four flats. The petitioner,
therefore, continued to be the owner of the property and if
and at all in respect of the other four flats, at the highest, on
the conveyance being entered into with parties purchasing the
flats, stamp duty would be payable. Insofar as the two flats,
which are reserved for the petitioner on her own land, the
petitioner continued to be the owner of the land and the flats
and, therefore, there was no question of the petitioner being
called upon to pay stamp duty.
Even in respect of the remaining four flats, the petitioner has
averred in paragraph 5 of the petition that the four flat purchasers
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 20 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

had already paid their respective stamp duties for their flats as such
there is no requirement of payment of stamp for the agreement.
Insofar as these averments are concerned, there is no specific denial
by the petitioner. Even otherwise, at the highest, if the flat
purchasers had not paid the stamp duty, it is only those other flats
which have been transferred to the flat purchasers which will be
assessable to stamp duty. It is clear that insofar as the
petitioner is concerned, the developer has only constructed a
building for the petitioner on the petitioner's own land and
there has been no transfer of interest in the property in favour
of the developer nor would the agreement constitute an
instrument under which any right, title or interest has been
transferred from the petitioner to the developer. The very fact
that Article 5(g-a) was introduced by the amendment would indicate
that the legislature, in order to bring such transactions, which
otherwise were not covered under the provisions of the Act, as it
then stood, thought to amend the Stamp Act and bring such
transactions also within the ambit of the Stamps Act and subject to
duty. Considering that we find that the second contention of the
respondents is also devoid of merit.”
(Emphasis added)
46. Now as we can see, there was no question of limiting the
decision in Prabha Ghate's case to the facts of that case. Paragraph 4
sets out the position in law. The clarificatory circular of 30th March 2017
attempts to bypass the decided jurisprudential question.
47. For our present purposes, it is necessary to reproduce both
circulars of 23rd June 2015 and 30th March 2017. The originals annexed
in Marathi are illegible. Translations have been provided. Nobody has
told us that these transactions are inaccurate, and we refer therefore to
rd
these. The 23 June 2015 guidelines at page 37 to 38 read thus:
O. No. 15/Va. Mudat/Guidelines/621
Office of the Inspector General of
Registration and Controller of Stamps,
Government of Maharashtra, Pune.
Date : 23/06/2015
Circular
Subject: Regarding stamp valuation at the time of allotment of
area to the members in new building in redevelopment project of the
Cooperative Housing Society.
In the cases similar to the case of Prabha Laxman Ghate, while
transferring the built-up area to the original owner vide the
incidental document to be executed as per the development
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 21 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

agreement executed between the owner of the property and the

developer, directions were issued pursuant to a circular No.
Petition-2013/1425/Pra. Kra. 260/M-1 dated 09/05/2014 of
Revenue and Forest Department, to charge stamp duty as per
Section 4 of the Maharashtra Stamp Act.
This office observed that different types of stamp duty has
been charged on the documents executed at the time of allotment
of new premises/tenements in the new building to the members
in Redevelopment Project of the Co-operative Housing Society.
The guidelines given in the above Government circular are
applicable only to cases similar to the case of Prabha Laxman
Ghate, while transferring the built-up area to the original owners
vide the incidental document to be executed. In redevelopment
project of the Co-operative Society the development agreement
has been executed between the Co-operative Society (Original
Owner) and Developer. Therefore, in the incidental agreement to
be executed in favour of Co-operative Society in accordance with
the said redevelopment agreement so executed, it is necessary to
charge stamp duty as per Section 4 of the Maharashtra Stamp
Act.
However, if the development agreement is executed only
between the Co-operative Housing Society and Developer,
the document to transfer the premises/tenements, which is
for the personal benefit to the original member of the
housing society, it is not to be construed as an incidental
agreement pursuant to the original development agreement
and it shall be treated as an independent agreement.
Therefore, on such documents, stamp duty shall be levied
on the construction costs for the area approved by the
housing society for the premises/tenements to be
transferred. If member is purchasing additional construction area
to that, then in such cases, stamp duty shall be levied on the
basis of the Annual Ready Reckoner Rate table
(Premises/shops/tenements/office/industrial).
Copy of the said Circular is available on www.igr
maharashtra.gov.in website in Circulars under the Publication
heading.
Sd/-
(Dr. Ramaswami N.)
Inspector General of Stamps and
Controller of Stamps
Government of Maharashtra, Pune
(Emphasis added)
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 22 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

48. The 23rd June 2015 guidelines reference the Prabha Ghate case.
The exception sought to be carved out by the last paragraph is clearly
incorrect. On the face of it, this exception is unsupported by the
decision of this Court in Prabha Ghate. It is an impermissible and
entirely incorrect assessment of the nature of the transactions and of
the statute.
49. The second clarificatory circular of 30th March 2017 refers to the
rd
23 June 2015 circular, and reads thus:
No. K.5/Stamp-17/Pra.Kr.10/13/303/17
inspector General of Registration &
Controller of Stamps (Maharashtra State),
Gr. Floor, New Administrative Building,
Opp. Vidhan Bhawan, Pune-1.
Date : 30.03.2017
CIRCULAR:
Subject : Regarding stamp duty on the document executed in
favour of a member after redevelopment of the property of Co-op.
Housing Society is completed.
Reference : Circular No. K.15/Bamudat/Margarshak Suchana/621
dt.23.06.2015 of the office of Inspector General of Registration.
INTRODUCTION:
1) It has been made clear vide Government Revenue & Forest
Department Circular No. Petition-2013/1425/Pra. Kra. 260/M-1 dt.
09.05.2014 that, while transferring the built up area to the owner
vide the incidental document to be executed as per the
development agreement executed between the owner of the
property and the developer, the property does not get transferred,
hence stamp duty on such documents should be charged as per
Sec. 4 of Maharashtra Stamp Act.
2) Pursuant to the above, clarification as to how the stamp duty
should be charged while giving premises in the new building in
redevelopment project of old building of the co-operative housing
society (i.e. when the original owner is a certain housing society),
has been given in Circular No. K.15/Bamudat/Margadarshak
Suchana/621 dt. 2306.2015 issued by the office of Inspector
General of Registration, in which it has been clearly stated that,
(A) If a development agreement has been entered into
between the housing society (original owner) and
developer and when the incidental agreement in
compliance of the said agreement is executed in favour of
housing society, the stamp duty on such incidental
agreement should be charged as per Sec. 4 of
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 23 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

Maharashtra Stamp Act.

(B) However, if the development agreement has been
executed only between the housing society (original
owner) and developer, the document transferring the
flat/unit in individual favour of the original member of
the housing society will not be treated as an incidental
document made for compliance of the original
development agreement, but will be an independent
document. Therefore, the stamp duty for the area approved by
the housing society for the flat to be transferred through such
document, should be charged on the construction cost.
3) National Real Estate Development Council, Mumbai and other
various units had called for detailed explanation of this
clarification from this office. It was especially demanded that, the
document to be executed in individual favour of the member in
compliance of the tripartite development agreement entered into
between the developer, housing society and member, is required
to be treated as the incidental document of the original
development transaction/agreement, hence the provisions of
Section 4 should be made applicable to such agreement.
On deliberations of the above factors, following explanation is being
given:
(1) In cases where the development agreement has been made
only between the housing society (owners) and developers,
the individual member is not a party to such development
agreement, hence the provision of Section 4 will not be
applicable to the transfer document in his (member) favour
and the stamp duty will have to be charged as mentioned in
2(B) in the introduction above.
(2) In cases where the following criterion are being complied
with—
(a) if a tripartite development agreement has been made
between the housing society (original owner), member
and developer, And,
(b) if a condition of making separate transfer document of
new flat in favour of each member is incorporated in the
original development agreement, And,
(c) if there is limited objective of transferring the built-up
area in the transfer document in favour of the said
member as per the terms and conditions of the original
development agreement. And,
(d) if the housing society is a consenter party in the
transfer document in favour of such individual member,
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 24 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

in such circumstances, the transfer document in favour of the individual

member shall be treated as incidental document of the original
development agreement and the provisions of Sec. 4 should be made
applicable to it.
(3) Here, it is clarified that the above explanation will be applicable
only to the area agreed in the development agreement. In case
the member is getting/purchasing more that the said agreed area,
the stamp duty should be charged on the valuation arrived at as
per the Annual Market Value Rate Chart for such additional area
(flat/shop unit/office/industrial) or the consideration amount,
whichever is more, as clarified in the circular under reference.
(4) However, in regard to the criterion regarding the document in
favour of individual member as mentioned in Sr. No. 2 above
especially regarding confirmation about the compliance of the
Criteria (c), is quasi-judicial process. Hence the directions are also
being given that, if the parties in such document are of the
opinion that these criterion in regard to the document are being
complied with and that the provision of Sec. 4 is becoming
applicable, then they may get one such transfer document in the
redevelopment scheme adjudicated from the Collector of Stamps
and accordingly the Sub Registrar may directly register other
similar documents having same draft in the scheme as per the
adjudication decision.
A copy of this circular is available on website
www.igrmaharashtra.gov.in of Registration & Stamp
Department under the category Publication at ‘Circulars’.
1) All the Collectors of Stamps
2) All Sub Registrars
Issued
sd/-
Jt Inspector General of Registration &
Supdt of Stamps (H.Q.), Maharashtra”
(Emphasis added)
50. The reference here seems to be to a requirement that the DA
between the developer, the society and the member should be treated
as an incidental Agreement attracting Section 4(1). There is no problem
with that requirement. The difficulty is with the refusal to see the PAAA
for what it actually is, and to demand that there should be only one
document, tripartite or multi-tripartite in nature, that everybody must
sign. As we noted, that does not even stand to reason because if
everybody signs the document, then Section 4(1) which speaks of
several instruments (meaning more than one document) simply has no
application. Section 4(1) clearly contemplates more than one
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 25 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

document. It does not speak of more than one party to a single

document. The stamp authorities are not entitled in law to issue such a
circular or to insist on any such requirement.
51. Further, in the 30th March 2017 circular, the distinction to be
drawn between the agreed area is only applicable where a society
member purchases at market value or agreed value additional FSI or
built-up area. It cannot apply to a member getting an equivalent area
or additional area as permitted in law. The conditions and criteria
imposed in sub-Clause (2) that there must be a Tripartite Development
Agreement, that this must require the execution of PAAA, that the only
objective must be to transfer the existing built-up area and that the
society must also be a consenting party to the PAAA is not a
requirement in law. It cannot be imposed at all under the Stamp Act.
Most certainly, it cannot be applied by means of a circular. It is in fact
entirely doubtful whether the circular is even law. It certainly cannot do
something that the parent statute does not contemplate.
52. The difficulty with the 30th March 2017 circular is that it apart
from saying that it is a guideline or a circular, and apart from setting
out certain criteria, that document purports to create certain exclusions,
exemptions and prohibitions. Viewed from any perspective what it says
is that if a document does not conform to the entirely artificial criteria
set out in that circular, and which have no basis in law, then the PAAA
must be assessed to stamp although there is nothing in PAAA that is
any sense an exception to, a departure from or a variation of the DA.
53. The only possible addition there is the extra area, but that, as
we noticed, is not even the subject matter of the controversy before us.
54. The result of this discussion is as follows:
(a) A Development Agreement between a cooperative
housing society and a developer for development of the
society's property (land, building, apartments, flats,
garages, godowns, galas) requires to be stamped.
(b) The Development Agreement need not be signed by
individual members of the society. That is optional. Even
if individual members do not sign, the DA controls the re-
development and the rights of society members.
(c) A Permanent Alternative Accommodation Agreement
between a developer and an individual society member
does not require to be signed on behalf of the society.
That, too, is optional, with the society as a confirming
party.
(d) Once the Development Agreement is stamped, the PAAA
cannot be separately assessed to stamp beyond the Rs.
100 requirement of Section 4(1) if it relates to and only
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 26 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

to rebuilt or reconstructed premises in lieu of the old

premises used/occupied by the member, and even if the
PAAA includes additional area available free to the
member because it is not a purchase or a transfer but is
in lieu of the member's old premises. The stamp on the
Development Agreement includes the reconstruction of
every unit in the society building. Stamp cannot be levied
twice.
(e) To the extent that the PAAA is limited to the rebuilt
premises without the actual purchase for consideration of
any additional area, the PAAA is an incidental document
within the meaning of Section 4(1) of the Stamp Act.
(f) A PAAA between a developer and a society member is to
be additionally stamped only to the extent that it
provides for the purchase by the member for actual
stated consideration and a purchase price of additional
area over and above any area that is made available to
the member in lieu of the earlier premises.
th
(g) Clauses (B), (1) and (2) of the 30 March 2017 circular
are unsustainable in law. The circular must be quashed.
Similarly, the 23rd June 2015 circular that purports to
exclude PAAAs from Section 4(1) is ultra vires the Stamp
Act and is liable to be quashed.
(h) The provision or stipulation for assessing stamp on the
PAAA on the cost of construction of the new premises in
lieu of the old premises cannot be sustained.
55. These findings are not limited to the facts of the present cases
before us.
56. Thus, the Petitions must succeed. Rule is accordingly made
absolute in terms of prayer clauses (a), (b), (c1) and (c2) of Writ
Petition No. 4575 of 2022. Those prayers are set out below:
“(a) This Hon'ble Court be pleased to declare the Impugned Circulars
rd th
dated 23 June 2015 and 30 March 2017 (Exhibit- “A” & “A/1”
to be ultra vires of Section 4 of the Bombay Stamp Act, 1958 and
being arbitrary, unreasonable and violative of Article 14 of the
Constitution of India and thus unconstitutional.
(b) This Hon'ble Court may be pleased to issue a Writ of Certiorari or
a Writ in the nature of certiorari or any other appropriate Writ,
order or direction under Article 226 of the Constitution of India
calling for the record and proceedings of the issuance of the
rd th
Impugned Circulars dated 23 June 2015 and 30 March 2017
issued by Respondent No. 2 and after going through the legality,
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 27 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

validity and propriety thereof, quash and set aside the same;
(c) This Hon'ble Court may be pleased to issue a Writ of Mandamus
or a Writ in the nature of mandamus or any other appropriate
writ, order or direction under Article 226 of the Constitution of
directing:—
(i) The Respondent No. 1 to cancel, withdraw or revoke the
Impugned Circulars dated 23rd July 2015 and 30th March 2017;
(ii) Directing the Respondents to correctly apply the ratio of
th
Prabha Laxman Ghate's case, the Notification dated 9 May
2014 and Section 4 of Maharashtra Stamp Act equally to the
Society and its members as a Owner/s and not to levy stamp
duty of more than Rs. 100/- on the instrument entered into by
the members of the Society with the Developer for the
Permanent Alternate Accommodation.”
57. Our reference to re-development and homes is to be read to
include garages, galas, commercial and industrial use and every form of
society re-development.
58. In the interim orders we had required the Petitioners to make a
deposit of 50% of the differential amounts demanded under the PAAAs.
These are obviously now required to be refunded. Where the deposits
are made with the Court, the Registry will permit all applications for a
refund with accrued interest. Where deposits are made with the stamp
office all refunds are to be processed upon production of an
authenticated copy of this order within four weeks from today.
59. We say nothing in regard to interest payable by the Government.
60. We express our thanks to learned Counsels who appeared in the
matter and especially Mr. Shukla for his assistance and for the
compilation that is being given to us.
61. All Writ Petitions are disposed of in these terms. In the facts and
circumstances of the case, there will be no order as to costs.
62. In view of the this, all pending applications are disposed of as
infructuous.
———
1
2004 SCC OnLine Bom 74 : (2004) 2 Mah LJ 665 : (2004) 4 Bom CR 148 : AIR 2004 Bom
267 : (2004) 2 Bom LR 745.

2
(2013) 1 SCC 641.

3
2016 SCC OnLine Bom 100 : (2016) 3 Mah LJ 761, per KK Tated J.

4
2009 SCC OnLine Bom 1986 : (2010) 2 Mah LJ 657 : (2010) 1 Bom CR 31.

Disclaimer: While every effort is made to avoid any mistake or omission, this casenote/ headnote/ judgment/ act/ rule/
regulation/ circular/ notification is being circulated on the condition and understanding that the publisher would not be
SCC Online Web Edition, © 2024 EBC Publishing Pvt. Ltd.
Page 28 Monday, August 05, 2024
Printed For: ISHIKA KESWANI, Symbiosis Law School
SCC Online Web Edition: https://www.scconline.com
© 2024 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

liable in any manner by reason of any mistake or omission or for any action taken or omitted to be taken or advice
rendered or accepted on the basis of this casenote/ headnote/ judgment/ act/ rule/ regulation/ circular/ notification. All
disputes will be subject exclusively to jurisdiction of courts, tribunals and forums at Lucknow only. The authenticity of
this text must be verified from the original source.