Parking Contract Is a Lease, Not a Management Agreement: Punjab & Haryana HC Limits Collector’s Power Under Section 31 of Stamp Act

The Punjab & Haryana High Court held that a paid-parking licence granted by the Municipal Corporation Chandigarh is a lease attracting stamp duty, but the Collector under Section 31 cannot impose penalty or direct recovery.

The Punjab and Haryana High Court, in a judgment pronounced on 10 August 2026, partly allowed a writ petition challenging a stamp-duty demand of ₹11,89,947/- raised against the operator of 32 paid parking sites in Chandigarh. Justice Kuldeep Tiwari, sitting singly at Chandigarh, held that the licence deed executed between the petitioner and the Municipal Corporation Chandigarh (M.C.C.) is, in substance, a lease deed under Section 2(16) of the Indian Stamp Act, 1899, and not a mere operation and management agreement. While upholding the impounding of the instrument and the assessment of deficient stamp duty, the court set aside the penalty of 50% of the deficient stamp duty and the recovery direction on the ground that the Collector’s jurisdiction under Section 31 of the Stamp Act is exhausted once the duty is determined.

The Dispute Before the High Court

M.C.C. invited e-bids for the operation and management of 32 paid parking sites for three years, with a reserve price of ₹2.12 crores per annum. The petitioner, Ram Sunder Prasad Singh, submitted the highest bid of ₹5,01,03,001/- per annum and was issued a Letter of Intent dated 16.01.2020. He furnished three bank guarantees, each equivalent to 10% of the annual bid amount, and was required to execute a Memorandum of Understanding/Licence Deed on stamp paper within fifteen days.

The petitioner delayed execution significantly. M.C.C. issued a show-cause notice dated 08.07.2020 for non-compliance. Despite a further communication dated 07.07.2021 invoking Clause 8 and Clause 32(d) of the tender document, the licence deed was executed and registered before the Sub-Registrar, Chandigarh, only on 16.07.2021, with stamp duty of ₹3,34,020/- affixed. The original deed was deposited with M.C.C., while a photocopy was retained by the petitioner.

During audit, the Audit Stamp Department of M.C.C. noticed that the head-note of the instrument contained the recital: “That the amount of the lease/licence deed is ₹5,01,03,001/- for a period of 3 years and which on computing to 1 year as rent is computed to ₹1,67,01,000/- (approx.).” The department treated this as a misleading description by which the petitioner had evaded the proper stamp duty. The Joint Commissioner, M.C.C., vide order dated 16.05.2023, impounded the instrument under Section 33 of the Stamp Act and forwarded it to the Collector for adjudication under Section 31. The Collector, vide order dated 26.09.2024, assessed the deficiency at ₹7,93,298/- and imposed a penalty of ₹3,96,649/- (50% of the deficient duty), directing total recovery of ₹11,89,947/-.

The petitioner challenged both orders in the present writ petition.

The Legal Issues Framed

Justice Kuldeep Tiwari structured the analysis around five discrete issues:

1. Whether the instrument is a simpliciter operation and management agreement or a lease deed.
2. Whether the Joint Commissioner had become functus officio once the licence agreement expired on 31.01.2023, given that impounding occurred on 16.05.2023.
3. Whether the Joint Commissioner’s opinion on insufficiency of stamp duty was grounded in reasons.
4. Whether the Joint Commissioner holds a public office within the meaning of Section 33 of the Stamp Act.
5. Whether the Collector, under Section 31, is competent to impose a penalty and direct recovery.

The petitioner argued that the instrument fell within Article 5(d) of Schedule I-A, attracting a nominal stamp duty of ₹15. He also challenged the Joint Commissioner’s statutory competence to impound, the timeliness of the impounding, and the Collector’s power to levy penalty under Section 31. The respondents contended that the instrument is a lease under Section 2(16)(c) of the Stamp Act, which includes any instrument by which tolls of any description are let, and that the entire stamp-duty proceeding was lawful.

How the Bench Reasoned

Issue I — Nature of the Instrument

The court examined Section 2(16) of the Stamp Act, which defines “lease” to include, beyond leases of immovable property, “any instrument by which tolls of any description are let.” Applying this definition, the court held that the parking sites were leased by M.C.C. to the petitioner and the instrument is, in substance, a lease deed attracting stamp duty under Schedule I-A read with Section 3 of the Stamp Act.

The court drew support from the Supreme Court’s judgment in Nasiruddin and Another v. State of Uttar Pradesh, 2018(1) RCR (Civil) 1004, where it was held that contracts awarded by a Municipal Corporation for collection of tolls, fees, and parking charges amount to a lease under Section 2(16)(c) of the Stamp Act. The definition of “lease” under the Stamp Act is intentionally more extensive than under Section 105 of the Transfer of Property Act, given the inclusive language of Section 2(16). Issue I was answered against the petitioner.

Issue II — Functus Officio and Timeliness of Impounding

The petitioner contended that the licence agreement expired on 31.01.2023 and the Joint Commissioner could not impound the instrument on 16.05.2023. The court rejected this on two grounds.

First, on facts: the Audit Stamp Department discovered the misleading recital during its annual inspection and placed the matter before the Joint Commissioner in the discharge of official duties. The audit function is an ongoing obligation; examining documents for proper stamp duty is integral to it. The Joint Commissioner acted on the audit report, formed the requisite opinion, and exercised powers under Section 33 within a legitimate administrative chain.

Second, on principle: the doctrine of functus officio applies to judicial and quasi-judicial decisions to provide finality to adjudicative processes. It has no application to administrative functions. Impounding under Section 33 is a purely administrative act, not a quasi-judicial one. The court relied on the Supreme Court’s observations in Orissa Administrative Tribunal Bar Association v. Union of India, 2023 SCC OnLine SC 309, that applying functus officio to administrative decision-making by the State would cripple executive power and prevent any policy or policy-based decision from being revisited.

The court also distinguished the Delhi High Court’s decision in M. Chowdhury v. The Collector of Stamps, Delhi, (1970) ILR 1 Delhi 606, relied upon by the petitioner. In that case, the question was whether a Sub-Judge could impound a document after passing a decree in the same proceeding. The holding of functus officio in that context arose because the Sub-Judge’s judicial role had ended. That ratio has no bearing on an administrative authority exercising an annual audit function. Issue II was answered in favour of the respondents.

Issue III — Sufficiency of Reasons for Impounding

The court found that the Joint Commissioner’s opinion was supported by the audit report and the instrument itself. The petitioner had paid stamp duty of only ₹3,34,020/- after computing annual rent at ₹1,67,01,000/-, whereas the correct computation on the highest bid of ₹5,01,03,001/- per annum would attract stamp duty at 2% of the average annual value, amounting to ₹10,02,060/-, plus duty on the security amount. The misleading head-note enabled the petitioner to evade the differential. The opinion was grounded in the audit report and the instrument’s own terms. Issue III was answered in the affirmative.

Issue IV — Whether the Joint Commissioner Holds a Public Office

Section 33(3) of the Stamp Act provides that, in cases of doubt, the State Government may determine what offices shall be deemed to be public offices and who shall be deemed to be persons in charge thereof. The petitioner argued that, in the absence of a formal notification, the Joint Commissioner lacked the power to impound.

The court read the provision carefully. The words “in cases of doubt” are the operative trigger for State Government determination. The office of the Joint Commissioner, M.C.C., cannot by any reasonable construction be regarded as other than a public office. The absence of a formal determination by the State Government does not strip the Joint Commissioner of his powers under Section 33 where no genuine doubt as to the public character of the office exists. Issue IV was answered in the affirmative.

Issue V — Whether the Collector Can Impose Penalty and Direct Recovery Under Section 31

This issue produced the only relief granted to the petitioner. The court analysed Section 31 carefully: it provides a mechanism for obtaining the Collector’s opinion on the duty chargeable on an instrument. The section ends with the determination of duty. It does not postulate any further action by the Collector — no penalty, no recovery.

The court applied the Supreme Court’s ruling in Government of Uttar Pradesh and Others v. Raja Mohammad Amir Ahmad Khan, AIR 1961 SC 787, at length. In that case, the Supreme Court held that Section 31 is complete in itself. Once the Collector gives his opinion on the duty chargeable, his powers and duties under Section 31 come to an end. If the person seeking determination wants to proceed further — to use the instrument as evidence or to have it registered — he must make up the deficient duty, whereupon the Collector issues a certificate under Section 32. But the mere seeking of an opinion under Section 31 does not attract the penalty provisions that arise when an impounded instrument is dealt with under Chapter IV (Sections 33 to 48) following a referral under Section 38 of the Stamp Act.

In the present case, the instrument was forwarded to the Collector under Section 31, not Section 38. The Collector therefore had no jurisdiction to impose a penalty or direct recovery. The court held that had the instrument been referred under Section 38, the position would have been different. Issue V was answered in the negative, against the respondents.

The Hariom Agrawal Argument Rejected

The petitioner also argued, relying on the Supreme Court’s decision in Hariom Agrawal v. Prakash Chand Malviya, AIR 2008 SC 166, that since the original instrument was never forwarded to the Collector, the proceedings were void. The court rejected this contention entirely.

The original licence deed was, by the terms of the tender, required to be deposited with M.C.C. as licensor; it was never in the petitioner’s possession after registration. Neither Section 31 nor Section 33 mandates production of the original before the Collector. The underlying purpose of impounding is to prevent further use of the instrument, not to require physical transmission of the original.

Further, the Hariom Agrawal decision concerned a wholly different question: whether a court could impound a photocopy of a lost original agreement and admit it as secondary evidence under Section 63 of the Indian Evidence Act, 1872. The Supreme Court held in that case that there is no scope for including a copy of a document as an instrument under the Stamp Act, and that a photocopy cannot be impounded or validated. Those facts are entirely different from the present case, where the original deed exists and was deposited with M.C.C.

Order

Justice Kuldeep Tiwari partly allowed CWP-34700-2024 by order dated 10 August 2026. The impugned order of the Collector dated 26.09.2024 was set aside to the extent it directed recovery of the deficient stamp duty and imposed a penalty of 50% of the deficient stamp duty — a sum of ₹3,96,649/-. The assessment of the deficiency in stamp duty at ₹7,93,298/- was left intact.

The court reserved liberty in favour of M.C.C. to take such further steps as may be necessary for recovery of the assessed deficient stamp duty in accordance with law. Any pending applications were disposed of accordingly.