CHENNAI: The Madras High Court has ruled that amendment agreement between lessor and lessee cannot be treated as a lease agreement since it does not transfer any new right in favour of the lessee.
Justice G K Ilanthiraiyan made the ruling recently while allowing the petitions filed by Tata Communications Data Centres Private Limited – the lessor – and Tata Communications Limited – the lessee.
Advocate Chevanan Mohan, appearing for the petitioner-companies, submitted that the lessor and the lessee entered into an agreement in 2014 for leasing out a building space of 65,965 sq ft. The agreement was registered by the sub-registrar in Triplicane by collecting Rs 1.20 crore stamp duty and Rs 20,305 registration fees.
Subsequently, both the lessor and lessee found the actual space available was 61,418 sq ft and so they presented the amendment agreement. The first respondent – District Registrar (Administration) – held that the amendment agreement shall be treated as fresh lease deed and issued a demand notice for Rs 1.15 crore as stamp duty for the entire lease consideration. Subsequently, the lessee paid the amount under protest.
Quashing the order of the District Registrar and directing refund of Rs 1.15 crore collected as deficit stamp duty, Justice Ilanthiraiyan noted that the amendment agreement is not a deed of creation of fresh lease in favour of the lessee that could attract any additional stamp duty.
He held, “Therefore, the amendment agreement cannot be treated as an instrument since it does not transfer any new right in favour of the lessee in respect of the subject premises. In fact, there has been a reduction in the extent of the premises as mentioned in the original lease deed.”
It is a settled principle of law relating to payment of stamp duty and the registration of any document under the provisions of Stamp Act and Registration Act that only those documents require registration on payment of stamp duty which are specified in the Acts.
“Equally well settled principle of law is that unless the execution of any document results in transfer of any right, title and interest in any immovable property by the act of parties in lieu of consideration – that is price – for such transaction, the document cannot be subjected to payment of stamp duty and registration as documents as defined under Transfer of Property Act,” the judge said in the order.
