Judgment

DAS GUPATA, J. : Where an instrument executed in Uttar Pradesh and consequently liable to stamp duty under the Indian Stamp Act as amended in Uttar Pradesh but relating to property in West Bengal bears stamps overprinted with the name of West Bengal comes before a public officer of Uttar Pradesh, is such officer right in holding that the instrument is not duly stamped inasmuch as it does not bear stamps overprinted with the name of Uttar Pradesh? That is the principal question which has arisen in this petition under Art. 32 of the Constitution.

2. The first Petitioner, a Company incorporated under the Indian Companies Act with its registered office at Calcutta, is the owner of a factory at Varanasi in the State of Uttar Pradesh. The petitioners numbers 2 and 3 are the shareholders of the first petitioner Company. The State of Uttar Pradesh having agreed to advance a loan of Rs. 1,45,00,000/- on the mortgage of the Company s assets at its jute mills at Budge Budge and at Ghusuri, all situated in West Bengal, the deed of mortgage was executed at Lucknow in the State of Uttar Pradesh on March 22, 1957. To this deed the first petitioner affixed stamps of the value of Rs. 1,08751/- purchased from the Collector of Stamps, Calcutta. It was duly registered at Calcutta on April 5, 1957. Thereafter, on March 23, 1957 by a deed executed between the first petitioner and the State of Uttar Pradesh a part of the mortgage property in West Bengal was released and in its place and stead a part of some properties of Uttar Pradesh were substituted. The deed of substitution was duly stamped and registered in Uttar Pradesh. No objection was then taken to the stamp affixed on the original deed of mortgage. In 1960 the first petitioner made a request to the State of Uttar Pradesh to release a further part of the mortgage properties included in the original mortgage deed and to accept in their place and stead the assets and properties of the Company s factory at Varanasi as substituted security. A draft deed for the substitution was sent by the first petitioner to the Collector of Varanasi for ascertaining the stamp duty payable on it and for getting the benefits of reduced rates of duty applicable in case of substitution of security. The Collector referred the matter to the Board of Revenue for adjudication of the Stamp duty on the document for substitution. Ultimately, the Board of Revenue, Uttar Pradesh, decided that as the original document had been executed at a place within Uttar Pradesh, it must bear stamps issued by the Uttar Pradesh Government. It rejected the argument that the document of March 23, 1957 was not an instrument and therefore could bear the stamps issued by the West Bengal Government. The Board of Revenue held that the Company was liable to pay Rs. 1,74,000/- as stamps duty on the document dated March 23, 1957 before it can avail of the concessional rate provided for in substituted security. Thereafter, the Collector of Varanasi, by a letter dated September 8, 1961 informed the first petitioner that (a) that the draft deed submitted by it was a substituted security chargeable under Art. 40 (c) of Sch. 1-B of the Uttar Pradesh Stamp Amendment Act, 1958 with a duty of Rs. 7,554/-, provided the original mortgage deed of March 22, 1957 was "first got properly stamped by payment of deficit duty of Rs. 1,74,000/-. The letter ended with a request for deposit of the deficit of Rs.1,74,000/- on the mortgage deed of March 22, 1957 and also for deposit of Rs. 7,554/- for the deed of substitution to be executed. This letter from the Collector was followed by a letter dated November 17, 1961 from the Tehsildar, Chandauli, Varanasi, demanding payment of Rs. 1,74,000/within a week of the receipt of the letter. On November 30, the first petitioner replied to this letter asking for a month s time. The present petition was filed on December 22, 1961.

3. Primarily, the petitioner s case is that under the provisions of the Stamp Act a docume