In a significant ruling affecting industrial land allotments in Navi Mumbai, the Bombay High Court has set aside a long-pending stamp duty demand of over ₹26 lakh raised against Deepak Fertilizers and Petrochemicals Corporation Limited.
The court held that an “Agreement to Lease” executed with City and Industrial Development Corporation of Maharashtra Limited (CIDCO) did not create a lease in law and therefore could not be taxed as one under the Maharashtra Stamp Act.
Justice Abhay Ahuja delivered the verdict after hearing detailed arguments from all sides, bringing clarity to a dispute that had travelled through revenue authorities for nearly three decades.
Background of the Case
The dispute traces back to the early 1990s, when CIDCO introduced a scheme to provide residential housing for employees of industries operating in Navi Mumbai. Under this scheme, developed plots were offered for staff housing through a tender process.
Deepak Fertilizers emerged as the successful bidder for a large plot at Kalamboli and paid the entire premium-over ₹3.73 crore-well in advance. In October 1995, CIDCO executed a document titled “Agreement to Lease” in the company’s favour.
The document allowed the company to enter the land for four years only to construct residential buildings for its employees. A full-fledged lease for 60 years, the agreement said, would be granted later-after construction was completed and certified by planning authorities.
However, in 1998, the Collector of Stamps took a different view. Treating the document as a lease, the authority demanded stamp duty of ₹26.14 lakh along with interest and penalties. This triggered a series of appeals, remands, and confirmations before the matter finally reached the High Court.
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Court’s Observations
At the heart of the case was a simple but crucial question: did the agreement create a present lease, or was it only a temporary licence pending a future lease?
The court examined the agreement clause by clause. It noted that the document repeatedly described the company as a “licensee” and explicitly stated that no legal interest in the land would pass until a registered lease deed was executed.
Justice Ahuja observed that the agreement “clearly records that nothing contained therein shall be construed as a demise in law.” The right granted was limited-only to enter the land, raise construction, and comply with CIDCO’s conditions.
Relying on earlier Supreme Court and Bombay High Court precedents, the bench reiterated the settled distinction:
“An agreement to lease, which does not create a present demise, is not a lease in law,” the court observed.
The judge rejected the revenue department’s argument that payment of a large premium or permission to construct permanent structures automatically converted the licence into a lease. What mattered, the court stressed, was whether the lessee obtained the right to exclusive possession-and that had not happened here.
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The Decision
Allowing the writ petition, the High Court quashed the 2005 order of the Chief Controlling Revenue Authority as well as the original demand raised by the Collector of Stamps.
The court held that the 1995 “Agreement to Lease” was only a licence coupled with a promise of a future lease and was not chargeable to stamp duty as a lease under Article 36 of the Maharashtra Stamp Act.
Consequently, the demand of ₹26.14 lakh, along with interest and penalties, was set aside in full. The rule was made absolute, and the petition stood allowed.
Case Title: Deepak Fertilizers and Petrochemicals Corporation Limited vs Chief Controlling Revenue Authority, Maharashtra & Ors.
Case Number: Writ Petition No. 5635 of 2005
Case Type: Writ Petition (Stamp Duty / Revenue Matter)
Decision Date: 18 December 2025
