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SUPREME COURT OF INDIA
AHSANUDDIN AMANULLAH, PRASHANT KUMAR MISHRA, JJ.
M/s Godwin Construction Pvt. Ltd. – Appellant
VERSUS
Commissioner, Meerut Division & Anr. – Respondents
Civil Appeal No. 7661 of 2014 With Civil Appeal No. 12552 of 2025 (Arising out of S.L.P. (Civil) No. 36434 of 2014)
Decided On : 08-10-2025
Civil Appeal No.7661 of 2014
(A) Indian Stamp Act, 1899 – Section 7 – Determination of stamp duty – In matters of stamp duty, decisive factor is not nomenclature assigned to instrument, but substance of rights and obligations it embodies – Court is duty-bound to ascertain true legal character of instrument – Unless nature and effect of such instrument are conclusively identified, application of any provision for determination of stamp duty on instruments under Stamp Act, 1899, cannot be undertaken. (Para 15)
(B) Indian Stamp Act, 1899 – Article 57 of Schedule 1-B read with Section 2(17) – Indian Contract Act, 1872 – Section 12 – Security Bond cum Mortgage Deed – Direction to pay deficient stamp duty together with penalty and interest – Appellant has executed “Security Bond cum Mortgage Deed” in favour of Meerut Development Authority – Transfer was made with intent that same shall remain charged by way of mortgage to secure due performance of obligations in developing colony and payment of external development charges – Instrument stipulates that in the event of default, Meerut Development Authority shall be entitled to sell mortgaged properties to realize the amount – Instrument executed by appellant fulfils essential characteristics of a mortgage deed – In substance and effect, deed confers right over specified properties in favour of Meerut Development Authority to secure performance of an obligation, while preserving appellant’s interest until full discharge of obligation – Nomenclature “Security Bond cum Mortgage Deed” is inconsequential, as it is substance and operative provisions of instrument which govern its character for the purposes of stamp duty – Deed was not executed by a surety but by principal debtor/appellant, company, through its Director – In absence of any surety, to attract Article 57 of Stamp Act, deed executed by appellant cannot be termed as a security bond – It, however, fulfils all requirements of a mortgage deed, falling under ambit of Article 40 of Schedule 1-B of Stamp Act. (Paras 16, 17, 25 and 26)
Civil Appeal arising out S.L.P. (Civil) No. 36434/2014
(C) Indian Stamp Act, 1899 – Section 2(17) and Article 40 of Schedule 1-B – Security Bond or Mortgage Deed – Determination of stamp duty – Instrument confers right over specified property to secure repayment – Instrument satisfies essential characteristics of a mortgage deed as defined under Section 2(17) of Stamp Act, 1899 – Nomenclature “Security Bond or Mortgage Deed” is not determinative; substance of instrument governs its character while assessing stamp duty – No distinct surety exists apart from principal debtor – Reference to personal liability in deed pertains to Director acting on behalf of company and does not transform the instrument into a security bond under Article 57 of Schedule 1-B of Stamp Act, 1899 – In substance and effect, deed constitutes mortgage executed by principal debtor itself, thereby attracting provisions of Article 40 of Schedule 1-B of Stamp Act, 1899, for the purposes of stamp duty – Impugned Judgments passed by High Court upheld. (Paras 27, 28, 29 and 30)
Facts of the case:
Civil Appeal No.7661 of 2014 calls in question impugned order dated 22.01.2013 passed by High Court of Judicature at Allahabad in Writ Petition No. 31966/2012, whereby High Court dismissed writ petition filed by appellant, affirming order dated 11.06.2012 passed by respondent No.1, which in turn affirmed order dated 15.09.2010 passed by respondent No.2, directing appellant to pay deficient stamp duty under Article 40(b) of Schedule 1-B of Stamp Act, together with penalty along with interest at the rate of 1.5% per month from the date of execution of the instrument till recovery.
Findings of Court:
Second limb of Article 57 of Schedule 1-B of Indian Stamp Act, 1899, is confined to instruments executed by a surety to secure obligations of another. In present case, although clause III of deed stipulates that mortgagor shall be personally liable to repay loan, Shri Naveen Mittal executed the deed solely in his capacity as Director of company acting on behalf of company.
Result : Appeals dismissed.
JUDGMENT
PRASHANT KUMAR MISHRA, J.
1. Leave granted in SLP (Civil) No.36434 of 2014.
FACTUAL MATRIX IN CIVIL APPEAL NO. 7661 OF 2014
2. Civil Appeal No.7661 of 2014 calls in question the impugned order dated 22.01.2013 passed by the High Court of Judicature at Allahabad in Writ Petition No. 31966/2012, whereby the High Court dismissed the writ petition filed by the appellant, affirming the order dated 11.06.2012 passed by respondent No.1, which in turn affirmed the order dated 15.09.2010 passed by respondent No.2, directing the appellant to pay Rs.4,61,760/- (Rupees Four Lakh Sixty-one Thousand Seven Hundred and Sixty) as deficient stamp duty under Article 40(b) of Schedule 1-B of the Stamp Act, together with penalty of Rs.100/- along with interest at the rate of 1.5% per month from the date of execution of the instrument till recovery.
3. On 18.12.2006, the Meerut Development Authority allowed the appellant to develop a colony known as “Global City, Abdullahpur, Meerut”. On 19.12.2006, the appellant executed a “Security Bond cum Mortgage Deed” in favour of the Meerut Development Authority under Article 57 of Schedule 1-B of the Indian Stamp Act, 1899 to secure performance of all obligations relating to the development of the colony, including payment of external development charges and provision of requisite amenities. The appellant mortgaged specified plots of land under the deed, totalling 2,934.45 square meters.
4. The appellant transferred all their interest in the properties specified in the deed to the Meerut Development Authority, intending that they shall remain mortgaged. In case of default of liability, the Meerut Development Authority shall be entitled to sell the mortgaged properties to realize an amount of Rs.1,00,44,000/- (Rupees One Crore and Forty-four Thousand). The appellant had also deposited an advance deposit of Rs.15,00,000/- (Rupees Fifteen Lakh) and upon the full discharge of all obligations, the surety under the bond and obligation will be void. A stamp duty of Rs.100/- was paid, in accordance with Article 57 of Schedule 1-B of the Indian Stamp Act.
5. On 16.02.2008, the Deputy Commissioner (Stamps), Meerut Circle, Meerut, issued a notice to the appellant stating that the stamp duty was payable under Article 40 of Schedule 1-B of the Indian Stamp Act, and initiated recovery proceedings under Section 33(4) for remaining deficit stamp duty of Rs.4,61,660/- (Rupees Four Lakh Sixty- one Thousand Six Hundred and Sixty).
6. On 07.07.2010, the appellant filed objections to the notice dated 01.05.2008 before respondent No.2. By order dated 15.09.2010, respondent No.2 held that the instrument described as “Security Bond cum Mortgage Deed” was chargeable under Article 40 of Schedule 1-B of the Indian Stamp Act and not under Article 57 as claimed by the appellant. Accordingly, he confirmed the demand for deficit stamp duty of Rs.4,61,660/- together with a penalty of Rs.100/- totalling Rs.4,61,760/- and interest at the rate of 1.5% per month with effect from the date of execution of the said instrument till the date of recovery.
7. Aggrieved by the order dated 15.09.2010 passed by respondent No.2, the appellant filed Stamp Appeal No.8/2010 under Section 56(1)(b) of the Indian Stamp Act before the respondent No.1. However, the said appeal was dismissed by respondent No.1 vide order dated 11.06.2012.
8. Aggrieved, the appellant preferred Writ Petition No.31966/2012 before the Hon’ble High Court. Vide judgment dated 22.01.2013, the High Court dismissed the writ petition, holding that the Security Bond cum Mortgage Deed dated 19.12.2006 was executed solely between the appellant and the Meerut Development Authority as a mortgage deed. In the absence of any surety or third party, it was chargeable under Article 40 of Schedule 1-B of the Indian Stamp Act, 1899. Pursuant to the above dismissal, the present Civil Appeal has bee
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