In a Matter handled by KNK, the Hon’ble Allahabad High Court, as an interim measure, orders removal of seal on premises of the Petitioner involved in a Stamp Duty Dispute.

Introduction

A Writ Petition was filed by C&B Aroma’s (Petitioner) Partnership firm before the Hon’ble Allahabad High Court with regard to the attachment and sealing of its premises in Noida Special Economic Zonewhich was purchased by him from Bank through auction owing to SARFAESI[1] proceedings. The property of the Petitioner was sealed by the Commissioner of Stamp for alleged deficiency in Stamp Duty[2] payable on the instrument of sub-lease executed between M/s Alcome Perfumes & Cosmetic (P) Ltd. (previous owner) and M/s Regent Cosmetics (illegal sub-lettee). The Hon’ble Allahabad High Court passed an interim order in the favor of the Petitioner directing the Sub-Divisional Officer, Tehsil to immediately remove the seal from the premises of the Petitioner.

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egal case of Allahabad court

Background

M/s Alcome Perfumes & Cosmetic (P) Ltd. was granted a sub-lease in 2007 on the land in question by the NSEZ Authority. Without taking the approval from the NSEZ authority, the land in question was further illegally sub-let by Alcome Perfumes & Cosmetic (P) Ltd. vide an unregistered lease agreement in the year 2011 in favor of M/s Regent Cosmetics. Subsequently, M/s Alcome Perfumes & Cosmetic (P) Ltd. underwent a financial distress due to which it defaulted on the re-payment of the loan. As a result, the land in question was auctioned in order to pay-off the loan in accordance with the SARFAESI Act[3] and the Petitioner firm was auctioned the land in the consideration of Rs 5,65,00,000/-. M/s C & B Aromas (Petitioner firm) was handed the possession over the land in question by the NSEZ Authority and also executed a sub-lease deed for a period of 15 years.

On 15.04.2017, the Assistant Commissioner of Stamp passed an order holding the M/s Regent Cosmetics liable for payment of deficient stamp duty on the unregistered lease agreement which was executed between M/s Regent and M/s Alcome Perfumes & Cosmetics (P) Ltd. The final fiscal liability of Rs 11,70,100 was fastened on M/s Regent Cosmetics. Subsequently, the Tehsildar, Dadri, affixed a Recovery Citation on 30.06.2017 on the premises of the Petitioner to which the Petitioner replied on 26.09.2017 stating that it was not the concerned party as far as the recovery proceedings is concerned. The Petitioner also asserted that the land in question was allotted to it by the NSEZ Authority free from all encumbrances and thus requested the Revenue Authority not to take any other further actions as the proprietary rights over the land in question now vests with the Petitioner, being the bonafide purchaser of the said land in question.

The Petitioner firm on 05.12.2017 preferred a Recall Application against the order passed by the Assistant Commissioner of Stamp on the ground that the Petitioner was not given a chance of being heard. The Recall Application was allowed by the Assistant Commissioner of Stamp on 12.12.2017 and in the same proceedings the Petitioner put forth its concern that it is not the concerned party in regard to the recovery proceedings and therefore objected the recovery citation put forth on its premises.

The Assistant Commissioner of Stamp without considering the submissions made by the Petitioner passed an order dated 22.11.2021 imposing a fiscal liability of Rs 6,33,050/- holding M/s Regent Cosmetics liable for the payment of deficient stamp duty. Although the recovery notice was in the name of M/s Regent Cosmetics, however, the address upon which the notice was issued was the land in question. Again a recovery citation was affixed at the premises of the Petitioner on 09.06.2022. A subsequent Application of Recall was made by the Petitioner which was rejected by the Assistant Commissioner of Stamp on 14.10.2022 citing that the grounds were already considered. As a result, the Tehsildar, Dadri, attached and sealed the premises of the Petitioner on 18.11.2022 by affixing the notice issued in the name of M/s Regent Cosmetics for the payment of deficient stamp duty.

The Petitioner firm preferred Appeal before the Chief Controlling Revenue reiterating its stand that it is not the concerned party as to the recovery proceedings and thus the recovery of the stamp duty may not be made by attaching the premises of the Petitioner, who is the subsequent bonafide purchaser of the land in question. The Petitioner also moved an Application in the Appeal before M/s Alcome for the determination of deciding whether the Respondent Authorities have jurisdiction to attach the property of the Petitioner for a fiscal liability that it not due upon it. Neither the Appeal nor the Application were registered despite filing in January 2023 and due to the same the Petitioner faced losses on daily basis because of the sealing of the premises. Aggrieved by the same, the Petitioner filed a Writ Petition in the Hon’ble High Court of Allahabad under Article 226 of the Indian Constitution[4] seeking the prayer of Mandamus to de-seal the property of the Petitioner and not to interfere with peaceful possession of the land in question and in the alternative directing the concerned respondent authority to not auction the land in question.

Order

The Hon’ble Allahabad High Court on 13.04.2023[5], observed that the matter requires consideration, as prima-facie, the Petitioner is not liable to pay the Stamp duty[6] on the lease deed executed by the M/s Alcome Perfumes (P) Ltd.in favor of the M/s Regent Cosmetics. As an interim measure, the Hon’ble High Court directed Sub-Divisional Officer, Tehsil Dadri, to immediately remove the seal of the property. The High Court also directed the Petitioner not to create any third party right till the final order.

Author: : Mayank Pandey, Intern at Khurana and Khurana IP Attorneys, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com

[1] SARFAESI Act , 2002.

[2] The Indian Stamp Act , 1899.

[3] Ibid.

[4] Constitution, Art 226.

[5] WRIT – C No. – 12283 of 2023, C and B Aroma S A Limited vs. State Of U.P. And 7 Others.

[6] The Indian Stamp Act , 1899.

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