The main legal point established was the application of the rule of beneficial construction and the analysis of the language and intent of the instrument to determine its nature as an 'instrument of trust' under the Indian Trusts Act.

CHANDRAKANTARAJ, J.

( 1 ) THIS matter has come before us by way of the reference made by the Chief Controlling revenue Authority in Karnataka under section 54 (1) of the Karnataka Stamp Act, 1957, (hereinafter referred to as the Act) for adjudication as to whether the instrument in question is an 'instrument of trust' as claimed by the author of the trust, viz. , the State Bank of Mysore, a subsidiary of the State Bank of india (hereinafter referred to as the Bank) or it is "deed of mortgage" as claimed by the revenue (State) and if not either what is the instrument on a correct interpretation of its contents and chargeable under which entry in the Schedule to the Act?

( 2 ) WE may at the out set state, if the instrument is but a trust deed, it is chargeable to stamp duty under the Act at rs. 90/- under Article 54 (A) in the Schedule to the Act and at the rate specified in Art. 34 of the Schedule to the Act on the market value of the properties secured (which is rs. 125 lakhs) if it is a deed of mortgage and duty payable will be 10 per cent of the market value of the properties together with such surcharge as may be payable to the local authority as if it is a deed of conveyance.

( 3 ) THE facts leading to the controversy may be stated and they are as follows: by a deed dated 23-3-1982 executed by the Bank styling itself as "debenture trustee" in favour of Unit Trust of India (hereinafter referred to as U. T. I.) concerning certain debentures issued by the New government Electric Factory Ltd. (a company incorporated under the Companies act) (herein- after referred to as N. G. E. F.) of the total value of Rs. 125 lakhs in two series was presented for rsgistration before the Sub- Registrar having jurisdiction who refused to register the same and did not pass any order rejecting registration. Therefore, the Bank, the U. T. I. and the N. G. E. F. presented an appeal to the District Registrar who refused to pass any order on the appeal as there was no written order by the sub-Registrar. Thereupon he was moved under Section 31 of the Act for adjudication of the proper stamp duty payable on the instrument in question. The District registrar in turn referred the matter to the chief Controlling Revenue Authority in the state under Section 53 (2) of the Act. The chief Controlling Revenue Authority gave a hearing to the parties who were represented by Counsel. The parties contended before him; that the document in question did not transfer, create, modify, abrogate, vary or extinguish any right of any person to any specific immovable property or properties but merely declared a trust, that in considering the nature of the instrument what was relevant was the normal and natural meaning of the words employed in the document together with its construction and intention; and that Art. 54 (A) in the schedule to the Act specifically provided for the duty payable in respect of declaration of trust concerning any property when made by any writing (not being a will) subject to maximum of Rs. 90/- and therefore there should be an adjudication accordingly. But the Chief Controlling Revenue Authority felt many doubts as; that the instrument had only some characteristics of a trust as defined under the Indian Trust Act, and not all; that the trustee (the Bank) itself was being benefitted by charging an annual fee till the liability of the N. G. E. F. was discharged under the debentures to the debenture holder; that there being other benefits provided to the debenture trustee such as reimbursement of out of pocket expenses, not ascertainable, the instrument may fall to be covered by Section 26 of the Act; and that the instrument had the character as the Bank was to hold the debentures as security for acting as trustee for advancing money and further that the document was so drawn up so as to be covered by several entries or articles of the Schedule, and therefore has referred the matter to High Court for adjudication under Section 54 of the Act opining

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