Distinction Between Conveyance and Development Agreement — Extensive Rights of Developer Held as Conveyance Under Maharashtra Stamp Act, 1958

Substance over form — The actual transfer of rights and interests determines the nature of the document. Proprietary interest conferred on the developer, including right to sell units and receive profits, amounts to conveyance of property rights. Extensive authority granted to the developer, including possession and development rights, establishes transfer of interest in immovable property. (Paras: 16, 18, 21, 29, 32)

The High Court held that the development agreement transferred substantial property rights, including possession, development, and sale rights, thereby constituting conveyance under Article 25. Dismissing the writ petition, the Court upheld the classification of the agreement as a conveyance and the demand for deficit duty and penalty.

Acts and Sections Discussed:

• Constitution of India, 1950 (COI) — Article 227

• Maharashtra Stamp Act, 1958 (Stamp Act) — Section 53A, Article 25, Article 5(g-a)

• Maharashtra Land Revenue Code, 1966 (MLRC) — Section 44

• Indian Contract Act, 1872 (ICA) — Sections 202, 205, 221

• Transfer of Property Act, 1882 (TPA) — Section 53A

Subjects: Stamp Duty — Development Agreement — Conveyance — Transfer of Property Rights — Deficit Duty — Penalty — Ownership Interest — Possession — Proprietary Rights

Nature of Litigation: The case involved a Writ Petition under Article 227 of the Constitution of India, challenging the classification of a development agreement as an instrument of conveyance under the Maharashtra Stamp Act, 1958.

Petitioner’s Relief Sought: The petitioner sought quashing of the demand for deficit stamp duty and penalty imposed based on the classification of the development agreement as a conveyance.

Reason for Filing the Case: The petitioner contested the order dated 3rd June 2017, passed by the Chief Controlling Revenue Authority, upholding the demand for Rs.5,84,900/- as deficit duty and Rs.11,69,800/- as penalty, contending the agreement was a development agreement, not a conveyance.

Decisions Already Taken:

1. Order dated 25th February 2016 — Joint District Registrar and Collector of Stamps directed the petitioner to pay the deficit stamp duty and penalty.

2. Order dated 3rd June 2017 — Respondent No.2 dismissed the appeal challenging the above order.

Issues:

• Whether the development agreement executed on 21st October 2005 constitutes a conveyance under Article 25 of the Maharashtra Stamp Act.

• Whether the transfer of rights to develop, sell, and assign interests in the land amounts to transfer of ownership.

Submissions/Arguments: Petitioner: (a) The development agreement did not transfer ownership but was an executory contract for development. (b) The agreement was covered under Article 5(g-a), not Article 25, and fixed duty of Rs.100/- was appropriately paid. (c) Reliance on Supreme Court precedents to argue that development rights do not confer proprietary interest.

Respondent (State): (a) The agreement transferred a bundle of rights, including development, sale, and conveyance rights, amounting to ownership interest. (b) The definition of conveyance under Section 2(g) of the Stamp Act covers transfer of any interest in property.