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2011 Supreme(All) 461
ALLAHABAD HIGH COURT
F.I.Rebello;CJ, Satish Chandra, J.
Vipin Kumar Singh -Appellant
Versus
State of U.P.& Ors. -Respondent
Writ Petition No. 1667 of 2011 (M.B.)
Decided On : 18-02-2011
Important Points
Subject
Civil Law - Contract Law
Act Referred
Headnote
Stamp Duty - Contract - Indian Stamp Act - Article 57, Section 2(17), Entry 40, Entry 40-B, Entry 57 - The court discussed the provisions of Article 57, Section 2(17), Entry 40, Entry 40-B, and Entry 57 of the Indian Stamp Act. It interpreted the definitions of 'mortgage deed' and 'bond' and analyzed their applicability to the case. The court also referred to previous judgments to establish the chargeability of stamp duty under Article 57 for security bonds and the distinction between different types of bonds.
Fact of the Case:
The petitioner challenged the demand for stamp duty of Rs.16,100 instead of Rs.100 for executing a bond to carry out a contract. The petitioner argued that Article 57 of Schedule 1B of the Indian Stamp Act required only Rs.100 stamp duty for the bond.
Finding of the Court:
The court analyzed the definitions of 'mortgage deed' and 'bond' and concluded that the bond in question was not a mortgage deed and did not fall under Entry 40 of Schedule 1B. It also determined that the bond did not fit the criteria of Entry 57 of Schedule 1B. The court referred to previous judgments to support its decision and allowed the petition, directing the petitioner to pay stamp duty under Article 57 of Schedule 1B.
Issues: The issues involved the interpretation of the Indian Stamp Act, specifically the applicability of stamp duty under Article 57 for the execution of a security bond.
Ratio Decidendi: The court held that the bond in question did not qualify as a mortgage deed under Entry 40 or as a security bond under Entry 57 of Schedule 1B. It relied on previous judgments to establish the chargeability of stamp duty under Article 57 for security bonds.
Final Decision: The writ petition was allowed, and the petitioner was directed to pay stamp duty under Article 57 of Schedule 1B. No costs were awarded.
2. The petitioner is a registered contractor with the Government of Uttar Pradesh in the field of Building and Road Construction work and the Government of Uttar Pradesh has issued a licence to the petitioner, which has been renewed from time to time. The petitioner made a bid pursuant to a tender, which was accepted by letter dated 10.2.2000. The petitioner was asked to deposit security of Rs.2,29,600/- as also to execute a bond of agreement to complete the work assigned to the petitioner in accordance with the terms and conditions agreed to.
3. According to the petitioner, as per the provisions of law as contained in Article 57 of Schedule 1B of the Act, a general stamp paper of Rs.10/- is to be supplied, where the amount secured does not exceed Rs.100/-, but in any other case a stamp paper of Rs.100/- is required. According to the petitioner, he is required to deposit a stamp paper of Rs.100/- only for the execution of the agreement to carry out the work allotted to the petitioner and hence, the demand of Rs.16,100/- is unreasonable and illegal.
4. Reliance has been placed on the judgement of Tajveer Singh and others Vs. State of U.P. & Others [1997 ACJ (1) 285/1997 (2) AWC 1029], wherein, according to the petitioner, it has been clearly laid down that security deposit/security bond is chargeable for stamp duty only in accordance with the provisions as contained in Article 57 of Schedule 1B of the Act. It is then pointed out that the judgement of Tajveer Singh (supra) has been followed by another Bench of this Court in the case of M/s Universal Engineers & Anr. Vs. State of U.P. & Others [Civil Misc. Writ Petition No.37536 of 2003]. Reference is also made to some other judgements. It is, therefore, submitted that the petition should be allowed.
5. The respondents have chosen not to file counter affidavit but have proceeded on the basis of the averments made in the petition, as the issue pertains to purely a question of law as to whether stamp duty could be demanded under Article 57 of Schedule 1B or Article 40 of Schedule 1B of the Act. Accordingly, by consent of parties, this petition has been heard finally.
6. We may firstly consider the two Entries in the Indian Stamp Act, being Entry 40, Entry 40-B of Schedule 1B and Entry 57 of Schedule 1B. We may also consider Section 2 (17) of the Act. Section 2 (17) of the Act defines the 'mortgage deed' and it reads as under:-
"2(17). 'Mortgage deed'.- Mortgage deed includes every instrument whereby, for the purpose of securing money advanced, or to be advanced, by way of loan, or an existing, or future debt, or the performance of an engagement, one person transfers, or creates to, or in favour of another, a right over, or in respect of specified property."
It is not necessary to interpret the said definition as the language is clear. A mortgage deed is basically entered into for securing money advanced or to be advanced in any of the modes set out in the definition.
7. Now we may reproduce Entry 40 of Schedule 1B of the Act, which reads as under:-
Description of instrument
Proper stamp duty
"40. Mortgage deed- Not being an agreement relating to deposit of title deeds, pawn or pledge (No.6), Bottomary bond (No.16), mortgage of crop (No.41), respondential bond (No.56) or security bond No.57)-
(a) When possession of the property or any part of the property comprised in such deed is given by the mortgagor or agreed to be given;
(b) when possession is not given or agreed to be given as aforesaid
Explanation
A mortgagor, who gives to the mortgagee a power of attorney to collect rents or a lease of the prope
