# Mohd. Farman v. State of U.P. and others

- **Citation:** (2001) 2 ILRA 2
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2001
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/mohd-farman-v-state-of-u-p-and-others-39849
- **Pages:** 5

## Text

2 INDIAN LAW REPORTS ALLAHABAD SERIES [2001
"1. For the last three years publishers
printer must have paid income tax.

2.
For the last financial year the
minimum annual turnover of the firm
must be over Rs. 50 lacks.

3.
Concerned printer must have printing
press of his own or of group.

4.
The printer/publisher must not have
any dispute legal or otherwise with the
Board."

4. The solitary question for our
adjudication
is
whether
the
aforementioned terms which have been
imposed are arbitrary and unreasonable
thereby break the provisions of Articles
14 and 19 (1) (g) of the Constitution?

5. We are of the view that the terms
and conditions imposed are reasonable
and not violative of Articles 14 and
Article 19(1) (g) of the Constitution. We
do
not
find
any
arbitrariness
or
unreasonableness in imposition of the
terms and conditions. Obviously they
have been imposed for protecting the best
interest in the speedy, efficient and
effective printing of the text books and
not to allot those who do not pay income
tax. It cannot be said that by imposing the
terms and conditions the petitioners'
fundamental right of trade or business
mentioned under Article 19 (1) (g) have
been violated.

6. For the reasons aforementioned
this writ petition is dismissed summarily.
Petition Dismissed.

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By the Court

1.

Petitioner,
Mohd.
Farman,
claimed to be a Registered Contractor and
General Order Supplier with the Public
2All] Mohd. Farman V. State of U.P. and others

Works Department of Uttar Pradesh and
other Corporations contends that the
Respondents (authorities of U.P. Public
Works Department, Rural Engineering
Services)
published
an advertisement
inviting
tenders
from
Registered
Contractors in order to execute certain
work. The Contractors were required to
furnish tenders form quoting rates. On
accepting
the
tenders,
Contractors
(Petitioner) was required to execute an
agreement with the Respondents and also
to deposit the contract amount as earnest
money apart from certain amount as
security with an object to ensure that
contract work was executed as per terms
and conditions of agreement between the
concerned parties. In case of default of
any of the conditions of the contract on
the part of either party, amount of
security, apart from other consequences
was to be forfeited; Petitioner alleges that
the Stamp Department issued instructions
to all the concerned Departments to
charge stamp duty apart from stamp duty
over other heads, on security deposits
under agreements entered into between
the Department and said Contractor. In
Paragraph 5 of the petition it is alleged
that vide letter dated 15th February 1996
Respondent No. 5/Executive Engineer,
Rural
Engineering
Service
(R.E.S.),
Division Meerut expressed acceptance of
the tender and required the Petitioner to
deposit a sum of Rs. 15,663/- as security
amount (Annexure-1 to the Writ Petition).

2. Petitioner is aggrieved due to the
instructions contained in the aforesaid
letter
dated
15th
February
1996
(Annexure-1
to
the
Writ
Petition)
directing the Petitioner to pay stamp duty
on security deposit by prescribing higher
rate of stamp duty and not to treat the said
refundable security deposit under Article
57, Schedule 1-B of Indian Stamp Act.
According to the Petitioner, Respondents
illegally want to charge stamp duty
treating
said
deposit
of
refundable
security under Article 40, Schedule 1-B.

3. Petitioner thus claimed writ of
mandamus directing the Respondents not
to realise stamp duty from the Petitioner
on the deposit of security amount on the
basis of order contained in letter dated
15th February 1996 (Annexure-1 to the
Writ Petition).

4. No Counter Affidavit has been
filed on behalf of the Respondents as per
record before the Court.

5. Heard learned counsel for the
Petitioner as well as learned Standing
Counsel on behalf of the Respondents.

6. According to the Petitioner, the
short controversy required to be decided
in the present petition is that the
Petitioner,
who
is
a
Registered
Contractor, has to pay stamp duty on the
refundable amount of security under
Article 57, Schedule 1-B as the deposited
refundable security amount is not a
mortgage.
Consequently,
Petitioner
alleges that the demand of stamp duty
over and above the rate prescribed under
aforesaid provision of Indian Stamp Act is
illegal and cannot be legally justified.

7. Learned Standing Counsel has
submitted 'written arguments' stating that
the only question; to be adjudicated in the
case
as
-
'whether
the
security
bond/deposit is chargeable with stamp
duty as per Article 57 of Schedule 1-B or
under Article 40 of Schedule 1-B?' In the
written
argument
learned
Standing
Counsel points out that this very question
4 INDIAN LAW REPORTS ALLAHABAD SERIES [2001
has already been referred by a learned
single Judge in Writ Petition No. 25706 of
1999 - M/s Sharma Build-tech (Pvt.) Ltd.
Versus The State of U.P. and others vide
order dated 30th June 1999. It appears that
this controversy had arisen in large
number of writs filed in the Court and one
of such case, being Writ Petition No.
47964 of 1999, has been referred to a
larger Bench.

8. Perusal of the referring order
indicates that the Court was considering
the scope and extent of Government
Order dated April 01, 1999 issued by
Principal Secretary, Tax and Institutional
finances, U.P. Government. The learned
single Judge has referred to the decision
of Tajveer Singh and others versus State
of U.P. and others - 1997 (2) A.W.C.
1029 as well as Supreme Court decision
In Board of Revenue versus A.M. Ansari-
AIR 1976 SC 1813.

The learned single Judge (S.R.Singh,
J) observed :

"The answer to the question is
interwoven with the interpretation of the
term 'Mortgage Deed' as defined in Sec.
2 (17) of the Act and interaction of Article
40 with article 57 of Schedule 1-B of the
act as well as terms and conditions of
contract as stipulated in the tender notice.
In Taveer Singh (supra) a Division Bench
has placed reliance on Supreme Court
decision in A.M. Ansari and held " the
position is thus settled that the security
deed is chargeable with duty under Article
57
of
Schedule
1-B.
I
have
my
reservations about the correctness of the
proposition laid down by the Division
Bench in the case aforestated. As a matter
of fact, the view so taken by the Division
Bench purports to be based on Supreme
Court decision in A.M. Ansari (supra) but
to me, it appears that the Supreme Court
decision in A.M. Ansari is not intended to
lay down the proposition that in each and
every case the stamp duty on security as
per the deed of agreement to be executed
for due performance of contract is
chargeable with duty under Article 57 of
Schedule 1-B only. In the case of A.M.
Ansari,
the
question
that
begged
consideration before the Supreme Court
was "as to whether the security deposits
made by the respondents savoured of the
nature of mortgages so as make the
respondents liable to pay the stamp duty
under Article 35- C of the Stamps Act."
The Supreme Court after noticing the
definition
of
'Mortgage
Deed'
as
embodied in Sec. 2 (17) of the Act held
bearing in mind clause (17) of the said
notice in that case thus "There is nothing
in the above clause to indicate that any
right over or in the security deposit was
created
in
favour
of
the
State
Government."

Further the learned single Judge observed:

"On a careful consideration of the
decision in A.M. Ansari, if would
transpire that in case, any right over or in
the security deposits is created in favour
of the State Government, in that event the
instrument may be termed as 'Mortgage
Deed' liveable to stamp duty under Art.
40 of Schedule 1-B and by that reckoning
the Government Order dated April 1,
1999 being Annexure-3 to the writ
petition, cannot be discounted. In the
above perspective, therefore, it would be
in the fitness of things if a larger Bench is
constituted to delve into the question."

9. Learned single Judge referred the
matter to larger Bench in view of
2All] Mohd. Farman V. State of U.P. and others

Government Order dated April 01, 1999
(referred to above). This contingency,
however, does not arise in the present
case since as the Government Order dated
April 01, 1999 (annexed as Annexure-3)
to the Writ Petition No. 25706 of 1999M/s Sharma Build-tech (Pvt.) Ltd. Versus
The State of U.P. and others) was not in
existence when the demand order dated
15th February 1996, (impugned in the
present petition) was issued.

10. To justify the imposition of
stamp duty under Article 40, Schedule 1B of the Act and to establish that under its
terms - reading the documents as a whole
- renders the security deposit - a
mortgage as defined under relevant Act, it
was incumbent upon the Respondents to
file a copy of the agreement in question to
satisfy the Court that the deed in question
required deposit of security, and though
refundable, it is covered by the definition
'Mortgage'. This has not been done.
Respondents have miserably failed to
bring on record even by way of pleading a
simple fact that deed in question requiring
deposit of security is in effect a mortgage
and, therefore, their stand requiring stamp
duty under Article 40, Schedule 1-B is
justified.

11. There is nothing on record of
this case, as it stands today, to indicate
that the any interest is being created in the
security amount as such and the deed
sought to be executed between the parties
is in the nature of mortgage deed. The
Respondents have failed to support their
claim of charging higher stamp duty
under Article 40, Schedule 1-B of the
Indian Stamps Act vide impugned order
dated 15th February 1996 (Annexure -1 to
the Writ Petition).

12. In absence of the above, decision
reported in the case of Tajveer Singh and
others squarely applies to the facts of the
present case.

13. Our view is supported by the
judgment and order dated 18th March
1996
passed
by
Division
Bench
comprising B.M. Lal and R.K. Mahajan,
JJ. In the case of M/s Shri pal Goel
Versus Deputy Director (Construction),
Rajya Krishi Utpadan Mandi Parishad
U.P. & others (copy filed as Annexure-2
to Writ Petition No. 31866 of 1996).

14. As a consequence thereof, Writ
Petition deserves to be allowed. It is
already noted above that there has been
no interim order. One can presume that
Petitioner has paid stamp duty under the
impugned order while executing his
contract agreement. In that situation
Petitioner cannot be granted relief as
claimed, but the Petitioner is entitled to
the relief being appropriately moulded by
the Court.

15. Consequently, the Writ Petition
stands allowed. A writ of mandamus is
issued directing Respondents to refund
excess amount charged as stamp duty on
security deposit provided Petitioner files
requisite application under Indian Stamps
Act within two months of receipt of
certified copy of this judgment and if such
an
application
is
being
filed,
as
contemplated above, the excess amount
shall be refunded to the Petitioner within
three months of filing of the application.
No costs.

Petition Allowed.
6 INDIAN LAW REPORTS ALLAHABAD SERIES [2001
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By the Court

1. This petition under Article 226 of
the Constitution has been filed praying
that a writ of mandamus be issued
commanding the respondents not to arrest
and detain the petitioner under the
provisions of section 3 of Conservation of
Foreign Exchange and Prevention of
Smuggling
Activities
Act,
1974
(hereinafter referred to as COFEPOSA)
and to restrain the respondents from
giving effect to the detention order passed
against the petitioner.

2. The authorities of Customs
Department conducted search of premises
bearing no. C.K. 13/48, Pashu Pateshwar,
Varanasi on 4.9.1999 and found twelve
bags of silk yarn of Chinese origin stored
therein. On opening of the bag, a label
was found which contained the writing -
"Blosoms, white Steam Filature China
National Silk Import & Export Corp.
Made in China." The wife of the owner
landlord of the premises informed the
authorities that the same had been let out
to a tenant. Thereafter, the owner of the
premises G.N. Mishra was summoned to
Customs Office, who informed in writing
and also gave an affidavit that the
premises had been let out to the petitioner
Mahesh Rathi on a rental of Rs. 1000/-
per month and he carries on business of
Banarsi Sarees and whatever goods were
found in the premises belonged to him.
The petitioner Mahesh Rathi was also
summoned in the office of Customs
Department, where in, his statement was
recorded on 4.10.1999. He admitted that
he was carrying on business of Banarsi
Sarees and his godown was situate in
premises no. 13/53, Pashu Pateshwar in
Varanasi city. He also admitted that
Rajesh Singh used to bring Chinese Silk
yarn from Bangladesh and Nepal and used
to give him for the purpose of sale.
Subsequently, the petitioner gave an
application that his statement had been
recorded by the Customs authorities under