Case Note & Summary
The petitioner, Universal Ferro & Allied Chemicals Limited, a company incorporated under the Companies Act, 1956, filed a writ petition under Articles 226 and 227 of the Constitution of India challenging an order dated 09.09.2005 passed by the Appellate Authority (respondent No. 1) under Section 32B of the Bombay Stamp Act, 1948. By that order, the petitioner's appeal was partly allowed but it was directed to pay deficit stamp duty of Rs. 11,64,180/-. The dispute arose from a Deed of Conveyance dated 27.03.1981 between Uniferro International Limited (vendor) and the petitioner company, whereby various lands were transferred by way of sale. The deed mentioned that the vendor had created a mortgage/charge on the lands in favour of various nationalised banks. The deed was registered on 30.03.1981, and the value of the properties was shown as Rs. 68,40,328.16. On 03.07.1985, the Collector of Stamps, Bhandara issued a notice to the vendors stating that there was a deficit stamp duty of Rs. 11,63,580/- in relation to the deed. Another notice was issued on 15.07.1985 stating that the instrument was chargeable with duty under Section 25 of the Act. The petitioner contended that the deed was a simple conveyance and not a mortgage deed, and thus not chargeable under Section 25. The respondents argued that since the deed mentioned the mortgage, it was chargeable as a mortgage deed. The court analyzed the provisions of the Bombay Stamp Act, 1948, particularly Section 25 which deals with mortgage deeds. The court held that the deed of conveyance did not create any mortgage; it merely mentioned an existing mortgage created by the vendor. Therefore, the instrument was not a mortgage deed and could not be charged under Section 25. The court set aside the demand for deficit stamp duty and allowed the petition in part, with no order as to costs.
Headnote
A) Stamp Duty - Conveyance Deed - Deficit Stamp Duty - Section 32B, Bombay Stamp Act, 1948 - The petitioner challenged an order demanding deficit stamp duty of Rs. 11,64,180/- on a deed of conveyance that mentioned an existing mortgage/charge. The court held that the deed was a conveyance and not a mortgage deed, and thus not chargeable under Section 25 of the Act. The court set aside the demand and allowed the petition in part. (Paras 1-10)
B) Stamp Duty - Interpretation of Instruments - Mortgage Deed - Section 25, Bombay Stamp Act, 1948 - The court held that a deed of conveyance which merely mentions an existing mortgage/charge created by the vendor does not become a mortgage deed. The instrument must itself create a mortgage to be chargeable under Section 25. (Paras 5-8)
Issue of Consideration
Whether a deed of conveyance that mentions an existing mortgage/charge on the property can be treated as a mortgage deed under Section 25 of the Bombay Stamp Act, 1948 for the purpose of levy of stamp duty.
Final Decision
The court allowed the writ petition in part and set aside the order dated 09.09.2005 passed by the Appellate Authority. The demand for deficit stamp duty of Rs. 11,64,180/- was quashed. No order as to costs.
Law Points
- Stamp duty
- Conveyance deed
- Mortgage deed
- Section 25 Bombay Stamp Act
- 1948
- Section 32B Bombay Stamp Act
- Deficit stamp duty
- Interpretation of instruments
Case Details
2014 LawText (BOM) (09) 146
WRIT PETITION NO.6069 OF 2005
Shri A. S. Jaiswal, Sr. Counsel with Shri H.N. Verma for Petitioner; Shri H. D. Dubey, Assistant Government Pleader for Respondents
Universal Ferro & Allied Chemicals Limited
The Deputy Inspector General of Registration & Deputy Controller of Stamps Nagpur, Joint District Registrar & Collector of Stamps Bhandara, Tahsildar Tumsar Tahsil, State of Maharashtra
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Nature of Litigation
Writ petition challenging an order demanding deficit stamp duty on a deed of conveyance.
Remedy Sought
The petitioner sought quashing of the order dated 09.09.2005 passed by the Appellate Authority under Section 32B of the Bombay Stamp Act, 1948, directing payment of deficit stamp duty of Rs. 11,64,180/-.
Filing Reason
The petitioner was aggrieved by the order of the Appellate Authority which partly allowed its appeal but directed payment of deficit stamp duty, contending that the deed of conveyance was not chargeable under Section 25 of the Bombay Stamp Act, 1948 as a mortgage deed.
Previous Decisions
The Collector of Stamps had issued notices on 03.07.1985 and 15.07.1985 claiming deficit stamp duty. The petitioner's appeal before the Appellate Authority was partly allowed but the demand for deficit stamp duty was upheld.
Issues
Whether a deed of conveyance that mentions an existing mortgage/charge on the property can be treated as a mortgage deed under Section 25 of the Bombay Stamp Act, 1948 for the purpose of levy of stamp duty.
Submissions/Arguments
The petitioner argued that the deed of conveyance was a simple conveyance and not a mortgage deed, and thus not chargeable under Section 25 of the Bombay Stamp Act, 1948.
The respondents argued that since the deed mentioned the mortgage, it was chargeable as a mortgage deed under Section 25.
Ratio Decidendi
A deed of conveyance which merely mentions an existing mortgage/charge created by the vendor does not become a mortgage deed. The instrument must itself create a mortgage to be chargeable under Section 25 of the Bombay Stamp Act, 1948.
Judgment Excerpts
The petitioner is a company incorporated under the Companies Act, 1956. On 27.03.1981 a Deed of Conveyance was entered into between Uniferro International Limited and the petitioner company.
The deed of conveyance was duly registered on 30.03.1981. The value of the properties that where subject matter of said deed of conveyance was shown to be Rs. 68,40,328.16.
On 03.07.1985 a notice was issued by the Collector of Stamps, Bhandara to the vendors in which it was stated that there was deficit stamp duty for amount of Rs.11,63,580/- in relation to the aforesaid deed of conveyance.
Thereafter, on 15.07.1985 another notice was issued in which it was stated that the instrument in question was chargeable with duty under Section 25 of the said Act.
Procedural History
The petitioner executed a Deed of Conveyance on 27.03.1981, registered on 30.03.1981. On 03.07.1985 and 15.07.1985, the Collector of Stamps issued notices claiming deficit stamp duty under Section 25 of the Bombay Stamp Act, 1948. The petitioner filed an appeal under Section 32B of the Act, which was partly allowed by the Appellate Authority on 09.09.2005, but the demand for deficit stamp duty was upheld. The petitioner then filed the present writ petition under Articles 226 and 227 of the Constitution of India.
Acts & Sections
- Bombay Stamp Act, 1948: Section 25, Section 32B
- Constitution of India: Articles 226, 227
- Companies Act, 1956:
