The 1st petitioner is a partnership firm and the 2nd petitioner is one of the partners. The firm established a Small Scale Industry at Thimmapur village of Kothur Mandal, Mahaboobnagar District, and it was so registered with the Department of Industries. With a view to purchase machinery and construction of buildings and its site, the 1st petitioner approached the 4th respondent bank for sanction of loan of Rs.7,45,00,000/-. After necessary correspondence and verification, the 4th respondent agreed to sanction the loan, subject to the condition that documents for the property of necessary value shall be deposited as security. Documents of different categories, relating to 21 items of properties, were deposited with the 4th respondent on 1.8.2006. On the next day, a Memorandum of Confirmation of deposit of title deeds was executed by the parties. The same was presented for registration with the 3rd respondent. A Stamp duty of Rs.1,000/- was paid, by claiming the benefit under G.O.Ms.No.316, Revenue (Registration-I) Department, dated 14.3.2006. The 3rd respondent issued notice, dated 30.11.2006, stating that the District Registrar, the 2nd respondent, has clarified that a sum of Rs.22,35,000 is to be paid under Article 35(b) of the Schedule to Indian Stamp Act, and accordingly, required the petitioners to pay the balance. The same is challenged in this writ petition.

2. It is contended that the respondents 2 and 3 treated the document as a Mortgage Deed, though what is presented to them is a Memorandum, evidencing deposit of title deeds. According to them, stamp duty payable on such document, under Article 7(a) & (b) of Schedule 1A to Indian Stamp Act, is 0.5% of the total transaction, subject to a maximum of Rs.50,000/-, and in case of small scale industries, the maximum stamp duty is restricted to Rs.1000/- under G.O.Ms.No.316, dated 14.3.2006.

3. The 2nd respondent filed a counter affidavit, stating that the document in question answers the description of mortgage deed, and accordingly, the petitioners were required to pay the balance of the stamp duty. It is also contended that the benefit under G.O.Ms.No.316 cannot be extended to the petitioners, since the document is a mortgage deed.

4. Smt. Dyumani, learned counsel appearing for the petitioners, submits that the document presented to 3rd respondent is only a Memorandum of Confirmation of deposit of title deeds, and there is absolutely no basis for respondents 2 and 3, in treating it as a Mortgage Deed. She contends that the document, by itself, did not bring about any transaction of mortgage, and that the actual deposit of title deeds has taken place, much before the memorandum was executed. She contends that the only purpose of seeking registration of the Memorandum is to ensure that the existence of mortgage, vis-d-vis the properties covered by the title deeds, is reflected in the register of encumbrances, and nothing more. She places reliance upon the judgment of the Supreme Court in D.D. SEAL v. R.L.PHUMRA (1), and the judgments rendered by certain High Courts, in support of her contention.

5. Learned Government Pleader for Revenue submits that though the document is titled as Memorandum, in effect and in its purport, it is a deed of mortgage. He contends that the object of the document is to create security, and deposit of title deeds was only incidental.

6. The Transfer of Property Act provides for mortgages of deferent categories, mentioned in Section 58. One of them is by deposit of title deeds. Section 59 prescribes the manner in which a mortgage is to be created. It reads as under:

“Mortgage when to be by assurance:- Where the principal money secured is one hundred rupees or upwards, a mortgage other than a mortgage by deposit of title-deeds can be effected only by a registered instrument signed by the mortgagor and attested by at least two witnesses.

Where the Principal money secured is less than one hundred rupees, a mortgage may be effected