K.C. Agrawal, J.
1. This is a reference made under Section 57 of the Stamp Act by the Board of Revenue, U.P. The questions referred are:
"1. Whether on the facts and circumstances stated above, the document Annexure 'A' was an agreement to let in consideration of Rs. 50,000/- and as such chargeable to duty as a lease under Article 35(b), Schedule 1-B of the Stamp Act as amended from time to time in its application to Uttar Pradesh?
2. In case the document in question is not held to fall under Article 35(b) of Schedule I-B, what stamp duty, if any, was chargeable on it?"
2. The Municipal Board, Budaun, was the owner of certain market known as Sabzi Mandi. The right to hold the market for the period 1-4-1968 to 31-3-1969 was auctioned on 8-3-1968. Four bids were offered. The highest bid for Rs. 50,000/- was of Ram Swarup, Jagdish Lal, Jiwan Lal and Kishan Lal jointly. They signed the bid sheet in token of acceptance of their offer. The highest bid was accepted by the President of the Municipal Board, Budaun. The contractors also recorded their acceptance of the terms and conditions of the auction. The terms and conditions incorporated in the bid sheet were as under:
1. The market was to be let out for one year, i.e., 1-4-1968 to 31-3-1969.
2. The total bid money was to be paid on the completion of the auction.
3. Within a week of the acceptance of the auction, an agreement was to be executed.
4. The Chairman, Municipal Board, was authorised to cancel the Theka for failure of the highest bidder to abide by any of the terms and conditions and the bidder was liable to pay any loss incurred by the Board by re-auctioning the said market.
3. The Inspector of Stamps and Registration, Bareilly Circle, who had been appointed as Collector for the purposes of Sections 33 and 40 of the Stamp Act, examined the said document in the office of the Municipal Board, Budaun, and treating it to be an agreement to let, impounded it and imposed duty of Rs. 2,250/- and an equal amount of penalty under Section 40 of the said Act.
4. Aggrieved by the aforesaid imposition, the contractors filed an application before the Board of Revenue under Section 56(1) of the Stamp Act.
5. The case of the contractors was that the document in question was not an agreement, hence was not dutiable under Article 35(b) of Schedule I-B. On the contrary, the view of the Board was that since the document contained all the essential conditions necessary for an agreement to let, as such, Article 35(b) was clearly attracted,
6. The question, therefore, that needs determination by us is whether the document in question could be held to be an agreement to let and, as such, was dutiable under Article 35(b) of Schedule I-B. For deciding this question, it may be necessary to refer to some of the relevant provisions of law. The relevant portions of Article 35 of Schedule I-B read as under:
"35. Lease, including an under-lease or sub-lease and any agreement to let or sublet -
(a) * * *
(b) where the lease is granted for a fine or premium or for money advanced and where no rent is reserved."
7. Section 2(16) of the Indian Stamp Act defines "lease". In so far as material for the purpose of the present case, it reads:
" 'Lease' -- 'lease' means a lease of immovable property, and includes also -
(a) & (b) * * * * *
(c) any instrument by which tolls of any description are let: (d) *****"
8. The term "Instrument'' has also been defined in Section 2(14) of the Stamp Act. It provides:
"Instrument includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded."
9. Article 35 of Schedule I-B would indicate that it is not only a lease which is covered by this Article, but also "any agreement to let". An agreement to let need not be a lease. In order to determine whether in any given case, it is reasonable to infer the existence of an agreement, one has to see if one party has made an "offer" and the other party has "accepted" the same. To constitute an agreement, it is necessary that the intention of the parties must be definite and common to both. This can be achieved if the terms and conditions are expressly arrived at or could impliedly be found.
10. The next question that arises in the present case is whether the bid sheet fulfilled the requirements of an agreement so as to be covered by Article 35(b) of Schedule I-B. We have extracted the terms and conditions of the agreement at the very threshold. These terms leave no room for doubt that the parties had agreed to give and take the lease. It was, however, argued that since the holding of the auction was not in itself an offer to sell but only an "invitation to treat", the contractors' bid was not an acceptance and did not constitute an agreement. The submission even if be assumed to be correct, it does not justify the view that an agreement had not been arrived at inasmuch as when the contractors participated in the auction and offered the highest bid, they would be deemed to have made the offer and by the subsequent conduct of accepting the bid made by the contractors, the offer would be deemed to have been accepted by the Municipal Board. The terms of the agreement having been specifically stated, and the same were enforceable, the bid sheet was, therefore, an agreement.
11. Relying on a decision of this Court in Trilok Chand v. Chief Controlling Revenue Authority (AIR 1973 All 473)(SB), learned counsel for the contractors contended that the bid sheet itself did not create any right or liability since it was not enforceable on the ground of vagueness. The submission made is not correct. In Trilok Chand's case (supra), the Bench found that since any terms or conditions relating to (i) maximum rate of tolls chargeable by the applicant, (ii) the operation of the lease, (iii) the mode, manner and time of the payment of auction money, and (iv) the consequences of any breach on the part of the applicant of the terms of the agreement, had not been mentioned, the agreement was not enforceable. The position in the instant case is, however, different. All the terms and conditions on which the lease had been given were stated in the bid sheet itself. It did not suffer from the vice of vagueness. It evidences an enforceable agreement. Accordingly, the aforesaid case of the Full Bench is not helpful to the contractors' counsel.
12. The next case relied upon was Mohd. Yaqoob Khan v. Chief Controlling Revenue Authority (AIR 1977 All 93)(FB). It is no doubt true that in this case the view taken was that the bid sheet neither created nor purported to create any right or liability, hence was not a document falling under Article 35(b) of Schedule I-B of the Stamp Act. It may not be disputed that a bid sheet simpliciter may not amount to an agreement so as to attract Article 35. As already stated above, an agreement is the result of mutual assent of two parties to certain terms. As in Mohd. Yaqub's case (supra) the bid sheet did not incorporate the acceptance of the offer made by the highest bidder, this Court held that the subsequent acceptance by the Board of the offer made in the bid sheet would not make the bid sheet an agreement.
13. In the instant case, it would be found that the offer was made immediately after the conclusion of the auction by the contractors and the same was followed by the acceptance by the Board of this offer. In this view of the matter, the agreement became complete, and, as such, was chargeable to stamp duty as an agreement to let, under Article 35(b) of Schedule I-B of the Stamp Act.
14. Counsel for the contractors, however, contended that as one of the terms stated in the bid sheet itself contemplated for the execution of a formal lease, the bid sheet could not be construed to be an agreement. He urged that Article 35 of Schedule I-B could apply only to a case where there was a present demise and as no actual demise took place under it, the bid sheet could not be considered to be an agreement attracting Article 35. The submission made is not correct.
15. In Darbari Singh v. Board of Revenue (AIR 1972 All 519)(SB), the Improvement Trust entered into an agreement agreeing to execute a deed of lease in favour of the applicant of that case or his nominee. The question was whether this document was an agreement to let immovable property for the purpose of stamp duty. The High Court held that the terms of the instrument made it clear that the Improvement Trust had underaken to grant in future a lease in favour of the applicant and the applicant for the purpose of obtaining the lease paid certain amounts by way of premium. In these circumstances, the document was an agreement to let and, as such, was liable to be stamped with the duty prescribed under Article 35 of Schedule I-B of the Stamp Act. The view taken further was:
"The Proviso added by the U.P. (Amendment) Act of 1962 to Article 35(c) in Schedule I-B of the Stamp Act also makes it clear that the agreement to lease may be something different from the lease itself."
16. An agreement to lease can, therefore, be an agreement which even though binds the parties to execute in future a lease, may not effect demise by its own force.
17. The view taken in the above case completely demolishes the submission made by the learned counsel for the contractors before us. It follows that merely because that the actual demise had not taken place on the date of execution of the agreement, and that a formal lease had to follow, that would not affect the character of the document.
18. Counsel next contended that as the Chairman of the Municipal Board had no authority to accept the offer, the acceptance made by him could not be considered to be an agreement. Reference was made to Sections 96 and 97 of the U.P. Municipalities Act, which provide the manner in accordance with which a contract has to take place. The submission made is not correct. The President, in his official capacity, accepted the offer of the contractors to take the Mandi for one year for consideration of Rs. 50,000/- and on account of acceptance by the President the agreement to let became complete. In our view, the provisions of the U.P. Municipalities Act cannot be read in determining the Stamp Duty due on a document when the Stamp Act itself contains a definition of 'lease'. Reading the definition of the word "lease" along with that of "Instrument", it would be found that even if a document purports to create or transfer a right, the same would attract the provisions of the Stamp Act. In the instant case, the document had been signed by the President of the Municipal Board in his official capacity. It purported to create a right in favour of the contractors. That being so, Article 35(b) of Schedule I-B of the Stamp Act would be clearly attracted.
19. In Hazrami Gangaram v. Kamla Bai (AIR 1968 Andh Pra 213), a Full Bench of the Andhra Pradesh High Court repelled the argument that a mortgage deed in order to be covered by the Stamp Act should be a valid transfer in law. It held :--
"In our opinion, there is no warrant for the importation of the requirements either of the Transfer of Property Act or the Registration Act to construe the documents or instruments under the Stamp Act, as the latter Act specifically defines the terms used therein.''
Since we are, however, not called upon to express any concluded opinion on the said controversy, it is not necessary for us to do so. It would suffice to mention that there is nothing on the record of the present case to show that the President of the Municipal Board had not been authorised by the Board for entering into the contract on its behalf or that a resolution, as was required by Section 96 of the U.P. Municipalities Act, had not been passed. Two things cannot be disputed. Firstly, Stamp duty is payable on instruments and not on transactions, and, secondly, the liability of an instrument to stamp duty depends on the circumstances which exist when the instrument is executed. However, there is no doubt that the Court can have regard to what is said and done thereafter in order to discover the true position when the instrument was executed. In the instant case, nothing was pleaded on behalf of the applicant to show that the Municipal Board concerned had not passed the resolution affirming the agreement in question. The agreement was genuine agreement.
20. For the reasons given above, we answer the first question in the affirmative and hold that the document Annex-ure 'A' was an agreement to let and, as such, was chargeable to duty as a lease under Article 35(b) of Schedule I-B of the Stamp Act.
21. As we have answered the first question in the affirmative, the second question does not arise.
22. The Revenue will be entitled to get costs of this reference which we assess at Rs. 300/-.