B. K. MEHTA, M. P. THAKKAR, S. OBUL REDDI, J.

( 1 ) THIS suo motu reference made by the Chief Controlling Revenue Authority under sub-sec. (1) of sec. 54 of the Bombay Stamp Act 1958 (hereinafter called the Stamp Act) as applicable to Gujarat highlights an instance of partial legislative misfire which has resulted in a situation where a document liable to stamp duty having been already acted upon the revenue is not able to collect the duty which ought to have been paid on it or to enforce its payment. This has happened because the loophole which enabled a party to escape from payment of differential stamp duty on account of the different rates of stamp duty prevailing in the State of Gujarat on one hand and the other States was plugged to an extent by making a provision for charging the duty but the Legislature failed to carry out its object completely inasmuch as it failed to make a provision in respect of collection of such duty if the document was already acted upon.

( 2 ) THE history of the matter culminating in the present reference requires to be stated briefly. The Nutan Mills Limited (hereinafter referred to as the Company) is a public limited Company having its registered office at Ahmedabad. A Charge in relation to its immovable properties situated at Ahmedabad was created in favour of the Bank of Baroda by issuance of debentures. In respect of this transaction a Debenture Trust Deed was executed between the Company on one hand and the Bank of Baroda at Bombay on the other. The Company approached the competent authority at Bombay for adjudication with regard to the proper stamp duty payable thereon in accordance with the Stamp Act applicable to the State of Maharashtra. In accordance with the adjudication stamp of Rs. 67 516 was affixed on the document in question. Now even though the properties on which the charge was created are situated at Ahmedabad it is permissible under the relevant provisions of law to have the Trust Deed registered at Bombay under the Indian Registration Act. But as per the requirement of sec. 125 of the Indian Companies Act of 1956 the document by which the charge is created or evidenced or a copy thereof verified in the prescribed manner is required to be filed with the Registrar of Companies at Ahmedabad for registration under provisions of the Indian Companies Act. As the law provides that the Company can produce either the document in original or a copy thereof the Company produced a copy of the original instrument verified in the prescribed manner before the Registrar of Companies Gujarat at Ahmedabad. The Registrar of Companies realised that even though the original instrument was executed in Bombay inasmuch as it related to properties situated in Gujarat the instrument was liable to stamp duty in Gujarat for the amount representing the duty payable at the Gujarat rate (which was higher) and the duty payable as per the Maharashtra rate having regard to sec. 19 of the Stamp Act. It is common ground that if the original instrument had been brought to Gujarat differential duty would have been payable on the aforesaid basis as per sec. 19 of the Stamp Act and that the duty would have to be paid within three months after it was received in the State as provided in sec. 18 of the Act. But then what was produced before the Registrar of Companies was not the original instrument but a verified copy thereof as it was permissible to do so having regard to the provision contained in sec. 125 of the Indian Companies Act. So far as the copy was concerned sec. 7 (1) was attracted and on a copy of the document according to the revenue duty was payable on the same footing as was payable on the original when it was received in the State. And the copy if it vas chargeable with duty under sec. 7 read with sec. 19 was not admissible in evidence under could not have been acted upon or registered by any public Officer unless it was duly stamped. Now the Registrar of Companies before whom the Company produced

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