Parking Fee Collection Contract Is a ‘Lease’ Liable to Stamp Duty; Collector Under Section 31 Cannot Impose Penalty or Order Recovery: Punjab & Haryana High Court

Case Name: Ram Sunder Prasad Singh v. U.T. Chandigarh through Additional Deputy Commissioner and Others

Date of Judgment: 10 August 2026

Citation: CWP-34700-2024

Bench: Hon’ble Mr. Justice Kuldeep Tiwari

Held: The Punjab and Haryana High Court held that an agreement granting the right to operate and manage paid parking sites and collect parking fees is, in substance, a “lease” within the meaning of Section 2(16) of the Indian Stamp Act, 1899, and cannot be treated merely as a simpliciter operation and management agreement. The definition of “lease” under the Stamp Act expressly includes an instrument by which tolls of any description are let. Consequently, the parking contract attracted stamp duty applicable to a lease deed under Schedule I-A read with Section 3 of the Stamp Act.

The Court, however, drew an important distinction regarding the powers of the Collector under Section 31 of the Stamp Act. It held that when an instrument is referred to the Collector under Section 31 for adjudication of proper stamp duty, the Collector’s jurisdiction is confined to determining the duty chargeable on the instrument. Once such determination is made, his function under Section 31 comes to an end. He cannot, while acting under Section 31, impose a penalty or direct recovery of the deficient stamp duty. Such powers arise under other provisions and procedures of the Stamp Act.
The Court further held that the Joint Commissioner, Municipal Corporation Chandigarh, did not become functus officio merely because the parking agreement had expired before the instrument was impounded. Impounding under Section 33 was an administrative function, and the expiry of the underlying contract did not prevent the competent authority from acting upon a subsequent audit objection concerning deficient stamp duty.

Summary: The dispute arose from a tender floated by the Municipal Corporation Chandigarh for operation and management of 32 paid parking sites for a period of three years. The reserve price was ₹2.12 crore per annum. The petitioner submitted the highest bid of ₹5,01,03,001 per annum and was issued a Letter of Intent dated 16 January 2020. He was required, among other things, to execute a Memorandum of Understanding/Licence Deed on appropriate stamp paper and deposit the original with the Municipal Corporation.

The petitioner eventually executed and registered the licence deed on 16 July 2021 after paying stamp duty of ₹3,34,020. During an audit, however, the Audit Department noticed that the agreement contained a recital stating that the amount of ₹5,01,03,001 was for a three-year period and worked out to approximately ₹1,67,01,000 as annual rent. The authorities treated this recital as incorrect because the petitioner’s accepted bid itself was ₹5,01,03,001 per annum.

Following the audit objection, the Joint Commissioner, Municipal Corporation Chandigarh, impounded the instrument under Section 33 of the Stamp Act and forwarded the matter to the Collector for determination of proper stamp duty under Section 31. By order dated 26 September 2024, the Collector assessed deficient stamp duty at ₹7,93,298 and additionally imposed a 50% penalty of ₹3,96,649, directing recovery of a total amount of ₹11,89,947. The petitioner challenged both the impounding and the Collector’s order before the High Court.

The petitioner primarily argued that the document was only an operation and management agreement rather than a lease; that the Joint Commissioner lacked jurisdiction to impound it after expiry of the contract; that the Joint Commissioner was not shown to be in charge of a “public office” for purposes of Section 33; and that the Collector acting under Section 31 had no power to impose a penalty or enforce recovery of deficient stamp duty.

The High Court identified five issues for determination: whether the agreement was an operation and management agreement or a lease; whether the Joint Commissioner had become functus officio after expiry of the agreement; whether the decision to impound was supported by reasons; whether the Joint Commissioner held a public office for purposes of Section 33; and whether the Collector could impose penalty and enforce recovery while exercising powers under Section 31.

On the nature of the transaction, the Court emphasised Section 2(16) of the Stamp Act, which gives the expression “lease” a wider statutory meaning and expressly includes “any instrument by which tolls of any description are let.” Since the Municipal Corporation had transferred to the petitioner the right to operate the parking sites and collect parking fees, the agreement fell within the statutory definition of a lease. It was therefore liable to stamp duty as a lease deed and could not be characterised merely as an operation and management agreement.

The Court drew support from the Supreme Court’s ruling in Nasiruddin v. State of Uttar Pradesh, where contracts permitting collection of tolls or fees, including parking fees, were treated as leases for purposes of the Stamp Act. The statutory definition of “lease” under the Stamp Act is wider than the conventional meaning of lease under Section 105 of the Transfer of Property Act, 1882. Accordingly, the Court answered the first issue by holding that the petitioner’s instrument was in substance a lease deed and stamp duty was payable accordingly.
On the petitioner’s argument that the Joint Commissioner had become functus officio because the agreement expired on 31 January 2023 while the document was impounded only on 16 May 2023, the Court held that the doctrine did not prevent the impounding. The Audit Department was entitled, in discharge of its official functions, to examine the document and bring deficient stamp duty to the notice of the competent authority. The Joint Commissioner could thereafter form the requisite opinion and exercise powers under Section 33.

Significantly, the Court observed that the doctrine of functus officio has no application in the sphere of administrative law in the manner suggested by the petitioner. Impounding a document under Section 33 is an administrative function, whereas assessment of stamp-duty deficiency by the Collector is quasi-judicial. Therefore, expiry of the underlying contractual arrangement did not exhaust the authority’s administrative power to act upon an insufficiently stamped instrument.

The Court also rejected the challenge to the status of the Joint Commissioner as being in charge of a public office. It interpreted Section 33(3) to mean that a specific determination by the State Government regarding what constitutes a public office is required only “in cases of doubt.” The office of Joint Commissioner, Municipal Corporation Chandigarh could not reasonably be regarded as anything other than a public office; absence of a separate government declaration therefore did not take away the power to impound the instrument.

The petitioner, however, succeeded on the important question concerning the limits of the Collector’s jurisdiction under Section 31. The Court held that Section 31 only authorises the Collector to determine the duty with which an instrument is chargeable. It does not confer an additional power to impose penalty or compel recovery of the amount so determined.

Relying upon the Supreme Court’s decision in Government of Uttar Pradesh v. Raja Mohammad Amir Ahmad Khan, the High Court reiterated that Section 31 is complete in itself. Once the Collector gives his determination regarding the proper duty chargeable, his powers and duties under that provision come to an end.

Accordingly, although the determination that the instrument was deficiently stamped survived, the Collector could not use Section 31 itself to impose the 50% penalty or direct recovery. The High Court specifically observed that the legal position would have been different had the impounded instrument been forwarded to the Collector under Section 38 of the Stamp Act. In the present case, however, it had been forwarded under Section 31.

The Court also rejected the petitioner’s contention regarding non-production of the original instrument before the Collector. It noted that the original licence deed remained in the custody of the Municipal Corporation and held that neither Section 31 nor Section 33 mandated production of the original instrument before the Collector in the manner asserted by the petitioner.

Decision: The Punjab and Haryana High Court partly allowed the writ petition. The order was set aside to the extent that it directed recovery of the deficient stamp duty and imposed a penalty equivalent to 50% of the deficient stamp duty. The determination regarding the deficient stamp duty itself was not set aside. Importantly, the Court reserved liberty to the Municipal Corporation Chandigarh to take appropriate steps for recovery of the assessed deficient stamp duty in accordance with law. Thus, the petitioner succeeded against the penalty and recovery direction under Section 31, but failed in his challenge to the classification of the parking contract as a lease, the impounding of the instrument, and the determination of deficient stamp duty.