1. Heard Sri B.D. Mandhyan, learned Senior Advocate assisted by Sri Om Prakash, Advocate for petitioner and learned Standing Counsel for the respondents.
2. The short and important question of law which has engaged attention of this Court in this writ petition which has been preferred under Article 226 of the Constitution is, "whether the document in question (Annexure-1 to the writ petition) is chargeable with stamp duty under Article 57 or Article 40 of Schedule 1-B, Indian Stamp Act, 1899 (hereinafter referred to as the "Act, 1899").
3. The Collector (Prescribed Authority)/Deputy Collector, Nautanwa, District Maharajganj vide order dated 10.04.1997 has held that the document in question is a simple mortgage deed chargeable for stamp duty under Article 40, Schedule 1-B of Act, 1899 and this order has been confirmed by Chief Controlling Revenue Authority, Board of Revenue, U.P., Allahabad vide order dated 10.08.2001, passed in Stamp Revision No. 59/1997-98 preferred by petitioner, which has been dismissed.
4. The facts, in brief, necessary to understand and answer the question referred to above, effectively, are as under.
5. The petitioner applied for business loan from Allahabad Bank, Branch Ghaziabad to the tune of Rs. 1.66 crores. The petitioner possessed immoveable property being plot No. 122-M, measuring 0.202 hectare, situate at Village Jugauli Tappa Sirsia, Pargana Vinayakpur, Tehsil Nautanwa, District Maharajganj. To ensure re-payment of loan, petitioner executed a deed, termed as "security bond of mortgage deed", placing aforesaid immoveable property as security with Bank. The deed was executed on a stamp paper of Rs. 100/- in purported compliance of Article 57, Schedule 1-B. The aforesaid document was presented before Sub-Registrar Nautanwa for registration on 04.12.1995, who forwarded the same to Collector for determination of appropriate stamp duty under Section 33/47-A, with his report dated 06.01.1996, observing that document in question, in his view, is a mortgage deed, and chargeable to stamp duty at the rate of Rs. 62.50 per thousand in the light of Article 40, Schedule 1-B and thus there was a deficiency of stamp of Rs. 1,37,500/-.
6. The matter was considered by Deputy Collector (Stamp) who has also been delegated with power under Section 33/47-A of Act, 1899 and vide order dated 10.04.1997, he concurred with the view taken by Sub-Registrar, and held, that document in question is a simple mortgage deed, chargeable with stamp duty at the rate of Rs. 62.50 per thousand. Aggrieved thereto, petitioner preferred Stamp Revision No. 59/1997-98 but the same has been dismissed by Revisional Authority vide order dated 10.08.2001. These two orders are impugned in this writ petition.
7. Sri B.D. Mandhyan, learned Senior Advocate appearing for petitioner, contended that the document in question was only to secure repayment of loan. The property was not mortgaged, no interest was created, hence it was a simple "security bond" chargeable to stamp duty, under Article 57, but it has wrongly been held by respondents as chargeable under Article 40, Schedule 1-B of Act, 1899.
8. Learned Standing Counsel, however, contended that in effect the document in question was a simple mortgage deed and, therefore, has rightly been held chargeable for stamp duty under Article 40, Schedule 1-B of Act, 1899 and, therefore, the orders of stamp authorities were warrant no interference.
9. In order to answer the above question, it would be necessary, first, to have a bird eye view on the relevant statutory provisions.
10. The term "mortgage", "mortgagor", "mortgagee", "mortgage-money" and "mortgage-deed" have been defined under Section 58(a) of Transfer of Property Act, 1882 (hereinafter referred to as the "Act, 1882") and read as under:
"58. "Mortgage", "mortgagor", "mortgagee", "mortgage-money" and "mortgage-deed" defined.--(a) A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability.
The transferor is called a mortgagor, the transferee s mortgagee; the principal money and interest of which payment is secured for the time being are called the mortgage-money and the instrument (if any) by which the transfer is effected is called a mortgage-deed."
11. The term "mortgage deed" however is also defined under Act, 1899 vide Section 2(17) and reads as under:
"2.(17) 'mortgage deed'.--Mortgage deed includes every instrument whereby, for the purpose of securing money advanced, or to be advanced, by way of loan, or an existing, or future debt, or the performance of an engagement, one person transfers, or creates to, or in favour of another, a right over, or in respect of specified property." (emphasis added)
12. The term "security bond" as such is not defined in Act, 1899 but the term "bond" has been defined in Section 2(5), which reads as under:
"(5) 'Bond'.--'Bond' includes--
(a) any instrument whereby a person obliges himself to pay money to another, on condition that the obligation shall be void if a specified act is performed, or is not performed, as the case may be;
(b) any instrument attested by a witness and not payable to order or bearer, whereby a person obliges himself to pay money to another; and
(c) any instrument so attested, whereby a person obliges himself to deliver grain or other agricultural produce to another."
13. The two articles applicability whereof is under dispute are also reproduced as under:
Description of instrument Proper stamp duty
40. Mortgage deed--Not being an agreement relating to deposit of title deeds, pawn or pledge (No 6), Bottomary bond (No. 16), mortgage of crop (No. 41), respondential bond (No. 56) or security bond (No. 57)--
(a) when possession of the property or any part of the property comprised in such deed is given by the mortgagor or agreed to be given;
The same duty as a conveyance [No. 23, Clause (a)], for a consideration equal to the amount secured by such deed.
(b) when possession is not given or agreed to be given as aforesaid The same duty as a bond (No. 15) for the amount secured by such deed.
Duty above 5 lakh remitted. (See item 151 Appendix II).
Explanation A mortgagor, who gives to the mortgagee a power of attorney to collect rents or a lease of the property mortgaged, or part thereof, is deeded to give possession within the meaning of this Article.
(c) When a collateral or auxiliary or additional or substituted security by way of further assurance for the above mentioned purpose, where the principal or primary security is duly stamped, for every secured nor exceeding Rs. 1000 Ten rupees And for every Rs. 1000 or part thereof in excess of Rs. 1000 Ten rupees Duty above 5 lakh remitted or above (see item 151 Appendix II) Exemptions (1) Instruments executed by persons taking advances under the Land Improvement Loans Act, 1883, or by the Agriculturists under the Agriculturists Loans Act, 1884, or by their sureties as security for the repayment of such advance.
(2) Letter of hypothecation accompanying a bill-of-exchange.
Description of instrument Proper stamp duty
57. Security bond or mortgage deed, executed by way of security for the due execution of an office, or to account for money or other property received by virtue thereof, or executed by a surety to secure the due performance of a contract or the due discharge of a liability--
(a) When the amount secured does not exceed Rs. 100.
Ten rupees
(b) in any other case One hundred rupees Exemptions Bond or other instrument when executed--
(a) by headman nominated under rules framed in accordance with the Bengal Irrigation Act, 1876, Section 99, for the due performance of their duties under that Act.
(b) by any person for purpose of guaranteeing that the local income derived from private subscriptions to a charitable dispensary or hospital or any other object of public utility, shall not be leas than a specified sum per mensem;
(c) under No. 3-A of the rules made by the State Government under Section 70 of the Bombay Irrigation Act, 1879.
(d) executed by person taking advances under the land improvement Loans Act, 1883 or the Agriculturists' Loans Act, 1884, or by their sureties, as security for re-payment of such advances.
(e) executed by officers of Government or their sureties to secure the due accounting for money or other property received by virtue thereof.
14. In order to attract Article 40 it has to be seen that the instrument in question creates right over specific property with intention to secure loan. In AIR 1954 Bom. 462, In Re: The Indian Stamp Act, 1899, the Court through Chagla, C.J. said that, if a document contains all the provisions which one would normally find in "mortgage deed", then the mere fact that document also contains the bargain with regard to deposit of title deeds, will not make it an agreement for deposit of title deeds.
15. In Chief Controlling Revenue Authority, Board of Revenue, Madras Vs. Jawahar Mills Ltd., Salem, AIR 1967 Mad. 1, a Full Bench of Madras High Court also took the same view. A mere description of a document would not determine the nature of that document but the intention of parties has to be culled out from the document and the contents of document will ultimately show its true nature.
16. Applying the same here, the mere fact that title document has been given as security bond while contents of document simultaneously show that it is a mortgage deed, the nature of document then has to be examined from the contents of documents and not on the title or nomenclature, chose to given by parties.
17. Now before going further, it would be appropriate to have some relevant stipulations of the document in question, which will help this Court to determine its true nature.
18. Para 1 of the agreement states "that in pursuance of the agreement between the borrower(s) and the bank and in consideration of the premises aforesaid the Mortgagor hereby grant(s) and transfer(s) to the Bank by way of simple mortgage as security for the loan advanced to the borrowers all his/her their right, title and interest in the land/house (together with all trees and other growths thereon) and buildings, erection, structures, fixtures, fittings, equipments and machinery which now are of hereafter at any time during the continuance of this security be erected or standing on or attached to or affixed to the land/house or any part thereof including all rights, liberties and easements in respect thereof and all the estate, rights, title, interest, claim and demand whatsoever of the said mortgagor(s) into all and upon the land and the said premises (hereafter all referred to as and the mortgaged premises)." (emphasis added)
19. Clause (III)(ii) and (b) of Para 1 of the agreement, reads as under:
"(ii) If in the opinion of the Bank circumstances exist under which the Bank's interest are in jeopardy or the whole or part of its security is-likely to be adversely affected reduced, lost diminished by or consequence of any Act or omission of the Mortgagor(s) or for any other reason whatsoever then and in any one or more of such case the money for the time being owing to the Bank from the Mortgagor(s) shall at the option of the Bank immediately become payable to the Bank and the Bank shall be entitled to exercise any of its rights and remedies in its discretion to enforce this mortgage and the decision of the Bank as to whether any one or more at the aforesaid circumstances exist shall be conclusive and binding upon the Mortgagor's in the event of the amount due to the Bank not being fully satisfied out of the sale proceeds of the mortgaged premises the mortgagor's shall be liable personally to reply the balance to the Bank.
(b) All the obligations of the Borrower(s) and mortgagor(s) and all the rights and remedies and powers of the Bank as mortgagee under the law for the time being in force except so far as they may be expressly varied or may be inconsistent with these present shall be deemed to be incorporated in these present, provided that the provisions of Section 61, 65A and 67A, respectively of the Transfer of Property Act, 1882 shall not apply to these presents or to the Mortgagor(s) or the Bank as Mortgagee interest and this shall be deemed a contract to the contrary for the purpose of these sections."
20. In order to construe a simple mortgage I find that it must consist of, (a) personal obligation express or implied, to pay; and, (b) transfer of a right to cause the property to be sold. Further one of the characteristic of simple mortgage is that possession is not given. In the present case looking to the contents of document, there can be little doubt in holding that it is a mortgage deed, chargeable for stamp duty under Article 40 and not Article 57.
21. Learned counsel for the petitioner has relied on a Division Bench decision in M/s Strong Construction through its partner Shesh Nath Singh vs. State of U.P. through Finance Secretary, Revenue and Finance, Government of U.P and others., 2005(98) RD 662 but therefrom I find that the Court decided the matter in absence of document which was chargeable for stamp duty and the Court had no occasion to go through its contents so as to determine its true nature. This is evident from a bare reading of paras 9 and 10 of the judgment, which read as under:
"9. The justify the imposition of stamp duty under Article 40, Schedule 1 B of the act and to establish that under its terms-reading the document as a whole-renders the security deposit-a mortgage as defined under relevant it was incumbent upon the respondents to file a copy of the agreement in question to satisfy the Court that that the deed in question required deposit of security, and through refundable, it is covered by the definition 'mortgage' . This has not been done respondents have miserably failed to bring on record even by way of pleading a simple fact that deed in question requiring deposit of security is. in effect a mortgage and, therefore, their stand requiring stamp duty under Article 40, Schedule 1B is justified.
10. There is nothing on record of this case as it stands today, to indicate that the any interest is being created in the security amount as such and the- deed sought to be executed between it parties is in the nature of mortgage deed, copy of the respondents have failed to support their claim Court that the of charging higher stamp duty under Article 40 Schedule 1 B of the Indian Stamps Act vide impugned order dated 15th February, 1996 (Annexure 1 to the writ Petition).
22. The Court thereafter and in absence of a document simply followed an earlier decision in Tajveer Singh and others Vs. State of U.P. and others, AIR 1976 SC 1813, but, in the present case, this Court has the document in question before it and having gone through the same, the relevant extract thereof is also reproduced hereinabove, I find that the document in question is a mortgage deed, chargeable under Article 40 and not Article 57, Schedule 1-B of Act, 1899, since it satisfy the requirement of a simple mortgage deed and cannot be said to be a mere security bond. The parties have chosen to give such title to the document is a fact totally irrelevant.
23. Similarly another Division Bench decision in M/s Monish and another Vs. State of U.P. and others, 2012(3) ADJ 401 also relates to a case where the bid of petitioner for civil construction work was accepted and he was required to furnish security in the form of National Security Certificate or fixed deposit or bank guarantee and on the document furnishing such security, the Stamp Authorities determined required stamp duty under Article 40, but this Court reversed that decision holding that Article 57 would be attracted and not Article 40. The case stands distinguished from its own facts and, therefore, would not help petitioner in any manner.
24. In the result, the impugned orders cannot be held faulty in any manner, so as to justify interference of this Court under Article 226 of the Constitution.
25. Dismissed. Interim order, if any, stands vacated.
Order Date :-18.04.2014 AK