December 30, 2025: The Bombay High Court has ruled that stamp duty cannot be imposed on an agreement to lease by presuming an intention to create a lease at a future date when the document itself does not bring about a present transfer of property rights. The Court clarified that an agreement which only allows limited entry onto land for a specific purpose, pending fulfilment of certain conditions, does not amount to a lease under the Maharashtra Stamp Act, 1958.
Justice Abhay Ahuja delivered the ruling while hearing a writ petition filed by Deepak Fertilizers and Petrochemicals Corporation Limited. The company had challenged orders issued by the Collector of Stamps and the Chief Controlling Revenue Authority, which had treated an “Agreement to Lease” executed with CIDCO as a lease and demanded a deficit stamp duty of ₹26,14,695 along with interest and penalty.
The dispute arose from a CIDCO scheme for allotment of residential plots in Navi Mumbai for staff housing of industrial units. Under the scheme, the petitioner was allotted a plot after paying the full premium. The subsequent agreement described the petitioner as a licensee for four years, allowed entry only for construction of staff quarters, and stated that a formal lease for 60 years would be executed only after completion of construction and fulfillment of contractual conditions.
After examining the clauses, the Court held that the agreement did not effect a present demise of the property. It noted that Clause 2 expressly stated that nothing in the agreement should be construed as a demise in law of the land. The Court observed:
“The said Agreement to lease does not create a present demise and is therefore not chargeable with stamp duty along with penalty and interest under Article 36 of Schedule I of the Stamp Act.”
The High Court rejected the Revenue’s argument that the parties intended to create a lease and had used the term “licence” to avoid stamp duty. It also dismissed the contention that deletion of Explanation III to Article 36 changed the legal position, reiterating that stamp duty is attracted only when there is an immediate and present demise.
Accordingly, the Court quashed the orders and demand notice, allowed the writ petition, and held that the agreement dated 13 October 1995 was not liable to stamp duty as a lease.
Source: Live Law
