C.R. No.657 of 2006 -1-
IN THE HIGH COURT FOR THE STATES OF PUNJAB
AND HARYANA AT CHANDIGARH
C.R. No.657 of 2006
Date of Decision: 08.10.2009
Mongi Lal .....Petitioner
Versus
The State of Punjab and another ...Respondents
Present: Mr. Sukhdeep Singh Brar, Advocate
for the petitioner.
Ms. Monica Chhibbar Sharma, DAG, Punjab.
CORAM:HON’BLE MR. JUSTICE K. KANNAN
1. Whether Reporters of local papers may be allowed to see
the judgment ?
2. To be referred to the Reporters or not ?
3. Whether the judgment should be reported in the Digest?
-.-
K. KANNAN J.(ORAL)
1. The orders, which are assailed in revision are a direction
given by the Collector, Gurdaspur to the mortgagor to pay
additional duty of Rs.1,13,385/- as duty payable on a simple
mortgage deed in purported exercise of powers under Section 47-A
of the Indian Stamp Act of 1899 and the subsequent order of
Commissioner, Jalandhar confirming the Collector’s order. The
document had been admittedly registered as a simple mortgage for
securing a loan of Rs.57,50,000/- with Indian Overseas Bank. The
clause 1, after setting out the preamble of the simple mortgage
deed reads as follows:-
“In consideration of the mortgagee bank, having agreed
to grant term loan of Rs.46,50,000/- (rupees forty six
lacs and fifty thousand only) and cash credit
C.R. No.657 of 2006 -2-hypothecation limit of Rs.11,00,000/- (rupees eleven lacs
only to the borrower/party of 2nd part, the
mortgagor/party of Ist part hereby mortgages the land
described in the schedule of property given below, with
an intention that the same shall remain subject to the
charge of the mortgagee bank, as security for the said
loan of Rs.46,50,000/- and cash credit hypothecation
limit of Rs.11,00,000/- along with interest @15.50 per
cent per annum on monthly basis, together with costs,
insurance premium and other charges as per the
agreement between the mortgagee bank and borrower, as
reflected in the account of the borrower in the books of
mortgagee bank.”
2. In clause 4 of the same document, the mortgagor has
made a covenant with the mortgagee that the land mortgaged with
the bank to secure a loan of Rs.57,50,000/- was made with
intention that the land shall remain mortgaged and subject to
charge of mortgagee bank till the complete repayment of the entire
outstanding amount, standing due and outstanding payable by the
borrower. Para 6 of the simple mortgage deed allows the
mortgagor to retain possession of the property and cultivate the
land. The stamp duty that had been originally collected on the
document appears to have been Rs.11,500/- but later as the
impugned order of the Collector shows, the Sub-Registrar,
Gurdaspur had made a reference to the Collector about the stamp
C.R. No.657 of 2006 -3-
duty and the registration fee, which was deposited. The order of
the Collector recites that the Sub-Registrar had reported that an
audit party has shown a balance of amount to be collected, as
required to be done under Article 40 (b) of the Indian Stamp Act
of 1899. A clarification had been sought by the Sub Registrar that
resulted in the proceedings to be issued by the Collector,
Gurdaspur for recovery of deficit stamp duty. The mortgagor
sought to defend the adequacy of stamp duty by reference to
Article 40 (c) and contended that only half a per cent of duty was
leviable which had been done and there was no deficit in payment
of duty. The Collector rejected the contention and directed the
collection of duty as per Article 40 (b). This order of the Collector
was challenged before the Commissioner, Jallandhar Division,
Jallandhar who affirmed the order of the Collector and dismissed
the appeal. The decisions passed by the Collector and the
Commissioner have now been challenged in civil revision.
3. Learned Counsel appearing on behalf of the petitioner
took me through the relevant provisions under Article 40 that is
the charging Section for levy of duty for simple mortgagors.
Article 40 reads as follows:
“Mortgage Deed, not being [AN AGREEMENT
RELATING TO DEPOSIT OF TITLE-DEEDS, PAWN OR
PLEDGE (No.6)] BOTTOMRY BOND (No.16),
MORTGAGE OF A CROP (No.41), RESPONDENTIA
BOND (No.56), OR SECURITY BOND (No.57)-
C.R. No.657 of 2006 -4-
(a) when possession of the The same duty as a Conveyance
property or any part of the (No.23) for a consideration
property comprised in such equal to the amount secured by
deed is given by the mortgagor such deed.
or agreed to be given;
(b) when [***] possession is The same duty as a Bond
not given or agreed to be given (No.15) for the amount secured
as aforesaid; by such deed.
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
deemed to give possession
within the meaning of this
Article.
(c) when a collateral or
auxiliary or additional or
substituted security, or by way
of further assurance for the
above mentioned purpose
where the principal or primary
security is duly stamped-
for every sum secured not exceeding Rs.1,000; Rs.10/-.
and for every Rs.1,000 or part
thereof secured in excess of Rs.1,000. Rs.10/-
Exemptions
(1) Instruments, executed by persons taking advances under the
Lands Improvement Loans Act, 1883 (10 of 1883), or the
Agriculturists’ Loan Act, 1884 (12 of 1884) or by their sureties as
security for the repayment of such advances.
(2) Letter of hypothecation accompanying a bill of exchange.
4. According to the learned counsel for the petitioner, the
property was admittedly not handed over and it was offered as
only collateral or auxiliary or additional or substituted security and
therefore, only Article 40 (c) must be operative. According to him,
the undertaking in the mortgage by the mortgagor itself must be
taken as the primary security and the property which was offered
as a mortgage was a collateral security and therefore, Article 40 (c)
would operate. In my view, such an interpretation is not warranted
C.R. No.657 of 2006 -5-
for, Article 40 (c) will be attracted only in cases where there is
already a primary security and such primary security is duly
stamped. If an additional or auxiliary security or a substituted
security is made through an instrument, it is then that Article 40 (c)
will be attracted. The reference to primary security cannot be a
personal undertaking for, the Section itself contemplates a primary
security which is “duly stamped”. It is nobody’s case that there
was any other bond on the security of the same property and stamp
duty had been collected. If the property had been handed over
possession to the mortgagee, then Article 40 (a) would be
attracted. If the property is held back by the mortgagor, it will be
Article 40 (b) and in a case where a property is retained by the
mortgagor and a primary security had already been granted to the
mortgagee and the property is again offered as an additional
security or a collateral security or auxiliary, it is then that Article
40 (c) will operate. Instruments of sub- mortgages or puisne
mortgages will be instances, which will be attracted to Article 40
(c) and the property which is offered as a security by the
mortgagor to the mortgagee for the first time shall attract only
Article 40 (b). The assessment by the Collector, under the
circumstances, was appropriate and the duty collected by the
registering officer was erroneous and required to be corrected.
6. Learned counsel appearing for the petitioner refers to a
decision of this Court in Abhinav Kumar Vs. State of Haryana
and others 2001 (1) RCR (Civil) 91 to the effect that the
C.R. No.657 of 2006 -6-
Registering Officer cannot make a reference after 8 days of
registering the instrument. The said decision also refers to an
earlier ruling in Civil Revision No.4412 of 1998, Vijya Ram Vs.
State of Haryana and others stating that the consistent view of
this Court is that there is no provision under the Stamp Act
wherein deficit stamp duty could be recovered by the registering
authority either from the vendor or from the vendee subsequent to
and after the registration of the sale deed. The consistent
authority as cited in the judgment is no doubt a correct statement
of law. However, it is the applicability of the correct position was,
in my humble view wrongly applied in Abhinav Kumar ‘s case
(supra). The Registering Officer cannot demand an additional
duty after the registration is made but the Collector’s power to
demand deficit and security is available under Section 47A (3) of
the Stamp Act. The “Registering Officer” mentioned in Section
47A(1) and the “Collector” mentioned in Section 47A(3) of the
Stamp Act are distinct authorities with different powers. The
decision in Abhinav Kumar’s case (supra) conflicts with bare
reading of statutory provision and does not, in my humble view,
state the law correctly. The Collector’s power to demand and
secure the deficit is available for a period of five years, which can
be either on his own motion or on a reference. Section 47A(1) and
Section 47A(3) of the Stamp Act are reads as follows:
“Section 47-A. Instruments under-valued, how to be
dealt with. – (1) If the Registering Officer, appointed
under the Registration Act, 1908, while registering any
C.R. No.657 of 2006 -7-instrument, has reason to believe that the market-value of
the property, which is the subject-matter of such
instrument, has not been truly set forth in the instrument,
he may after registering such instrument, refer the same
to the Collector for determination of market-value of
such property and the proper duty payable thereon.
(2) ……………..
(3) The Collector may, suo motu, within five years from
the date of registration of any instrument, not already
referred to him under sub-section (1), call for and
examine the instrument for the purpose of satisfying
himself as to the correctness of the market-value of the
property, which is the subject matter of any such
instrument, and the duty payable thereon and if, after
such examination he has reason to believe that the market
value of such property has not been truly set forth in the
instrument he may determine the market-value of such
property and the duty as aforesaid in accordance with the
procedure provided for in sub-section (2). The
difference, if any, in the amount of duty, shall be payable
by the person liable to pay the duty:
Provided that nothing in this sub-section shall apply to
any instrument, registered prior to the date of the
commencement of the Indian Stamp (Madhya Pradesh
Amendment) Act, 1975.”
7. The registration of the mortgage was made on
28.08.2002 and the proceedings of the Collector taken within the
stipulated period provided under Section 47A (3) is perfectly
valid.
8. The orders of the Collector and the Commissioner are
maintained and the civil revision petition is dismissed. No costs.
(K. KANNAN)
JUDGE
October 08, 2009
Pankaj*