High Court Of Delhi
Govind Impex (P) Ltd. & Ors. vs. Appropriate Authority
Sections 269UA(F), 276AB, 278B
O.P. Dwivedi, J.
Crl. Misc. (M) No. 3793 of 2001
10th October, 2002
Counsel Appeared
P.K. Aggarwal with Ajay Pandey & Anuj Kumar Sinha, for the Petitioners : R.D. Jolly with S.C. Sharma, for the Respondents : T.S. Alag & Kuldeep Pabley, for the Interveners
JUDGMENT
O.P. Dwivedi, J. :
Through this petition which is under Art. 226 of the Constitution of India the petitioners seek quashing of order dt. 24th April, 2001, and the criminal proceedings initiated in pursuance thereof under s. 276AB of the IT Act (for short the ‘Act’) r/w s. 278B of the Act. Vide order dt. 16th Oct., 2001, on the request of learned counsel for the petitioners the Division Bench of this Court treated this petition as an application under s. 482, Cr.PC.
2. Briefly stated the facts leading to this petition are that vide registered lease deed dt. 31st May, 1991, petitioners jointly let out front portion of the property bearing No. B-68, Greater Kailash, Part-I, New Delhi, to M/s ANZ Grindlays Bank on monthly rental of Rs. 2,50,000 for a period of nine years. Clause 12 of the said lease deed stipulated that the said lease could be renewed for further period of nine years at the option of the tenant bank if the later gave at least three months prior notice expressing his intention for renewal and execute a fresh lease deed. On 4th Dec., 1995, the respondent Appropriate Authority, IT Department, issued a show-cause notice to the petitioners asking them to show cause as to why petitioners be not prosecuted under Chapter XX-C for their failure to submit Form 37-I within 15 days of the draft agreement. According to the Appropriate Authority, the said lease deed was for a period of more than 12 years and therefore, the non-submission of Form No. 37-I within 15 days of the agreement was punishable under s. 276AB for violation of s. 269UC of the Act. The petitioners gave reply dt. 12th June, 1996, contending that the lease was not for a period of more than 12 years. However, this contention of the petitioners did not find favour with the respondent who passed the impugned order dt. 24th April, 2001, authorising Sh. V.K. Singhal, Addl. CIT, Appropriate Authority, New Delhi, to file a criminal complaint which eventually was filed and pending in the Court of ACMM, Delhi. Hence this petition.
3. I have heard learned counsel for the parties and perused the records.
4. The controversy revolves around the interpretation of the lease deed dt. 31st May, 1991, for ascertaining whether the lease was for a period of more than 12 years in which case such lease will be covered within the meaning of the word ‘transfer’ as defined in s. 269UA(f) of the Act and make the provisions of Chapter XX-C of the Act applicable thereto, Explanation attached to s. 269UA(f) which has direct bearing on this issue, reads as under :
“Explanation : For the purposes of this sub-clause, a lease which provides for the extension of the term thereof by a further term or terms shall be deemed to be a lease for a term of not less than twelve years, if the aggregate of the term for which such lease is to be granted and the further term or terms for which it can be so extended is not less than twelve years;”
5. A plain reading of the Explanation to s. 269UA(f) makes it clear that if the aggregate term of the lease i.e., the original term of stipulated extended period comes to more than 12 years such a lease will attract the provisions of Chapter XX-C of the Act. It is obvious that application of Chapter XX-C to such lease deed will not depend upon the contingency of the tenant extending the lease after the expiry of the original term. The authorities under the Act are not supposed to wait till expiry of original stipulated term to see whether the lease is renewed or extended and then decide the question of applicability or non-applicability of the provisions of Chapter XX-C of the Act to the transaction depend upon the renewal/non-renewal of the lease. The applicability of provisions of Chapter XX- C to such transactions will have to be decided solely on the basis of the terms of the lease executed between the parties and if on a proper interpretation/understanding of the terms of the lease and provisions of Chapter XX-C of the Act, the authority comes to the conclusion that the lease is for a period of more than 12 years, the provisions of Chapter XX-C would automatically apply to such a transaction. In the present case the initial term of the lease stipulated was for nine years extendable purely on the discretion of the lessee for second term of nine years. Para 1 of the lease deed contained the recital to this effect in the following words : “……..for a period of nine years, extendable purely at the discretion and option of the lessee of the second part for a further period of nine years, commencing from the date when the possession of the premises is handed over i.e., 1st June, 1991, and ending on the last date when the period of first nine years expire i.e., on 31st June, 2000, at a monthly lease amount of Rs. 2,50,000 subject to the periodic revision as mentioned in later para…….”
6. Para 12 of the lease deed stipulates that for the renewal of the lease for the second term the lessee will have to give three months prior notice and a fresh lease deed will have to be executed and duly registered. Thus, so far as petitioners are concerned, the lease was intended to be executed for more than 12 years as the renewal/extension of lease was purely at the discretion and option of the lessee. If the lessee opted to renew/extend the lease for the second term, the petitioners could have no objection thereto. So in view of Explanation to s. 269UA(f)(i) of the Act such a lease shall be deemed to be a lease for a term of not less than twelve years.
7. Learned counsel for the petitioners made a vain attempt to take the case out of the purview of the Explanation to s. 269UA(f)(i) by drawing distinction between the words “extension” and “renewable”. The Explanation to s. 269UA(f)(i) uses the word extension whereas cl. 12 of the lease deed uses the word renewal. According to the learned counsel for the petitioners, only the case of extension of lease for subsequent terms are covered by Explanation to s. 269UA(f)(i). Learned counsel for the petitioners cited some decisions to support his contention. In the case of Rasiklal M. Mehta & Anr. vs. The Hindustan Photo Films Manufacturing Co. Ltd. AIR 1976 Mad 194, it was held that once a tenant exercises its option for renewal of the existing tenancy for further period, what comes into existence is a fresh tenancy in place of the old tenancy and such tenancy will have to satisfy the requirement of the law regarding making of the tenancy and the lease for more than one year which has to be by a registered deed, otherwise it would be considered to be a tenancy from month to month. The argument that the fresh terms of the lease does not constitute a fresh lease but is only a continuation of the old lease was squarely rejected by the Madras High Court, according to which any such extension/renewal of the lease which is for a period of one year or more has to be by a registered instrument. To the same effect are the observation of our High Court in the case of Shukla Malhotra & Ors. vs. Vyasa Bank Ltd. (1998) 73 Delhi Law Times 124. In the case of Provash Chandra Dalvi & Anr. vs. Biswanath Banerjee & Anr. AIR 1989 SC 1834, the facts were that second respondent in the appeal had leased out some land by registered lease deed dt. 26th Sept., 1946, for a period of ten years w.e.f. 1st April, 1946 with the stipulation that if the lessee complied with all the terms and conditions of the lease, lease will be extended for five years i.e., up to 31st March, 1961, and then for a further period of one year at an enhanced rate. Under s. 5 of the Calcutta Thika Tenancy Act, 1949, a person who holds any land under a registered lease deed for a duration of more than 12 years did not fall within the definition of Thika Tenancy. The contention of the appellant in that case was that original stipulated term of lease was 10 years so they are covered by the definition of Thika as given in s. 5 of the Calcutta Thika Tenancy Act, 1949, and are, therefore, entitled to protection under the said Act but Hon’ble Supreme Court held that lease was for a period of more than 12 years. While dealing with the words ‘extension’ and ‘renewal’, the Supreme Court in para 12 of the said judgment observed that “……… The distinction between ‘extention’ and ‘renewal’ is chiefly that in the case of renewal, a new lease is required, while in the case of extension the same lease continues in force during additional period by the performance of the stipulated act. In other words, the word ‘extension’ when used in its proper and usual sense in connection with a lease means a prolongation of the lease….” After considering all the terms of the lease, the Supreme Court observed that the purposes of the lease were not expected to last for only ten years. In that case it was specifically mentioned in the schedule that lease was for a stipulated period of twenty years.
8. In the present case also it is clearly stipulated in para 1 of the lease deed that the lease was extendable purely at the discretion and option of the lessee on the second part for a further period of nine years. On a conjoint reading of paras 1 and 12 of the lease deed, it becomes clear that lessor intended the lease to last for 18 years. The lessor could not have refused to renew/extend the lease after first term if the lessee complied with the conditions for renewal/.extension. So in view of Explanation to s. 269UA(f)(i) of the Act the total terms of lease will be 18 years no matter whether it is for a single term of 18 years or two terms of nine years each or three terms of six years each or six terms of three years each. Whether the subsequent terms are described as extensions or renewals is immaterial for the purpose of s. 269UA(f). If the aggregate of the original term and stipulated extension/renewal comes to more than 12 years, such a lease will fall under the purview of Explanation to s. 269UA(f)(i) of the Act and it will be considered to be a lease for not less than 12 years thereby making the provisions of Chapter XX-C of the Act applicable thereto.
9. In view of above, petition fails and is hereby dismissed.
[Citation : 260 ITR 299]
