1. Challenge to stamp duty assessment on supplementary mortgage deed — whether instrument is fresh mortgage or auxiliary security under Article 38(c) of Indian Stamp Act, 1899. (Para 1 , 2 )
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2026 Supreme(MP) 337
IN THE HIGH COURT OF MADHYA PRADESH AT JABALPUR
SANJEEV S. KALGAONKAR, J.
The State of Madhya Pradesh and Others - Petitioners
Versus
Sasan Power Limited - Respondent
Writ Petition No. 16429 of 2014
Decided On : 20-07-2026
Important Points
A supplemental mortgage deed creating security over newly acquired land for an existing loan, without increasing the loan amount or creating new borrowing, is treated as collateral or auxiliary security under Article 38(c) of Schedule 1-A of the Indian Stamp Act, 1899, not as a fresh mortgage.
Subject
Revenue Law - Stamp Duty
Act Referred
Headnote
(A) Indian Stamp Act, 1899 - Schedule 1-A, Article 38(c) (now Article 43(c)) - Section 4 - Stamp duty on mortgage deeds - Collateral, auxiliary or additional security - Whether an instrument mortgaging newly acquired land to secure an existing loan without increasing the loan amount qualifies as a fresh mortgage or as additional security - An instrument executed in furtherance of existing mortgage deeds to include additional properties acquired by the borrower, where the aggregate outstanding amount remains the same and no fresh lending occurs, is to be treated as collateral or auxiliary security - Such instrument is chargeable with the fixed stamp duty under Article 38(c) of Schedule 1-A rather than as a fresh mortgage deed. (Paras 16, 17)
(B) Transfer of Property Act, 1882 - Section 58 - Definition of mortgage - A mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced. (Para 8)
Facts of the case:
Multiple mortgage deeds were executed to secure financial facilities. Subsequently, a Fifth Supplemental Indenture of Mortgage was executed to create a mortgage over additional lands acquired by the borrower for the project. The Collector of Stamps concluded that the instrument created a new mortgage and was insufficiently stamped, imposing a penalty. This order was reversed by the Board of Revenue, which held that the instrument was collateral and auxiliary to the main mortgage. The State challenged this reversal through a writ petition.
Findings of Court:
The Court found that the supplemental mortgage was executed pursuant to a covenant in the original mortgage deed requiring the borrower to secure any further property acquired. Since the aggregate outstanding amount remained the same and no fresh borrowing was executed, the instrument acted as a further assurance to the secured parties.
Issues: Whether the supplemental mortgage instrument constitutes a fresh mortgage chargeable with full stamp duty or a collateral/auxiliary security eligible for the concession under Article 38(c) of Schedule 1-A of the Indian Stamp Act, 1899.
Ratio Decidendi: A supplemental deed that adds properties to an existing mortgage to serve as additional security for the same loan amount, without any fresh lending or increase in liability, qualifies as a collateral, auxiliary, or additional security under Article 38(c) of Schedule 1-A of the Indian Stamp Act, 1899.
Result: Petition dismissed.
(B) Transfer of Property Act, 1882 - Section 58 - Definition of mortgage - A mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced. (Para 8)
Facts of the case:
Multiple mortgage deeds were executed to secure financial facilities. Subsequently, a Fifth Supplemental Indenture of Mortgage was executed to create a mortgage over additional lands acquired by the borrower for the project. The Collector of Stamps concluded that the instrument created a new mortgage and was insufficiently stamped, imposing a penalty. This order was reversed by the Board of Revenue, which held that the instrument was collateral and auxiliary to the main mortgage. The State challenged this reversal through a writ petition.
Findings of Court:
The Court found that the supplemental mortgage was executed pursuant to a covenant in the original mortgage deed requiring the borrower to secure any further property acquired. Since the aggregate outstanding amount remained the same and no fresh borrowing was executed, the instrument acted as a further assurance to the secured parties.
Issues: Whether the supplemental mortgage instrument constitutes a fresh mortgage chargeable with full stamp duty or a collateral/auxiliary security eligible for the concession under Article 38(c) of Schedule 1-A of the Indian Stamp Act, 1899.
Ratio Decidendi: A supplemental deed that adds properties to an existing mortgage to serve as additional security for the same loan amount, without any fresh lending or increase in liability, qualifies as a collateral, auxiliary, or additional security under Article 38(c) of Schedule 1-A of the Indian Stamp Act, 1899.
Result: Petition dismissed.
Legal Category Hierarchy
- revenue and taxation
- property law
- practice and procedure
Advocates Appeared:
For the Petitioners:Shri Abhijeet Awasthi - Deputy Advocate General and Shri Daya Ram Vishwakarma - Government Advocate.
For the Respondent:Shri Naman Nagrath - Senior Advocate assisted by Shri Prabhanshu Chaturvedi.
For the Petitioners:Shri Abhijeet Awasthi - Deputy Advocate General and Shri Daya Ram Vishwakarma - Government Advocate.
For the Respondent:Shri Naman Nagrath - Senior Advocate assisted by Shri Prabhanshu Chaturvedi.
Table of Contents
2. Petitioner contended instrument creates fresh mortgage; respondent argued it is collateral/auxiliary security under existing mortgage. (Para 3 , 4 )
3. Petition dismissed; Board of Revenue order upheld — instrument is auxiliary security not fresh mortgage. (Para 18 , 19 )
4. What constitutes a collateral or auxiliary security under Article 38(c) of Schedule 1-A of the Indian Stamp Act, 1899?
An instrument that creates additional security for an existing debt, with the principal security already duly stamped, qualifies as auxiliary, not a fresh mortgage. (Para 7 , 16 , 17 , 18 )
5. Does a supplemental mortgage deed that adds newly acquired property to an existing mortgage create a fresh mortgage or auxiliary security?
When the instrument is in furtherance of an existing continuing security and does not create new debt, it is auxiliary security under Article 38(c). (Para 14 , 15 , 16 , 17 )
6. What is the effect of a 'continuing security' clause in determining stamp duty on a subsequent mortgage deed?
The clause indicates that the security is additional to existing security, supporting classification as auxiliary rather than a fresh mortgage. (Para 14 , 15 )
ORDER :
This petition is filed under Article 227 of the Constitution of India is filed feeling aggrieved of the order dated 10.07.2014 passed by the Board of Revenue in Revision case No. 208-2/14, whereby the order dated 23.06.2014 passed by Collector of Stamps has been reversed. The Petitioner has prayed for the following reliefs:
"(i) That, this Hon'ble Court may kindly be pleased to allow the instant petition and set aside the order impugned order dated 10.07.2014 (Annexure-P/1).
(ii) That, any other order, which this Hon'ble Court deems fit in the facts and circumstances of the case, may kindly be passed."
2. The dispute revolves around interpretation of instrument dated 19.06.2014 titled as "Fifth Supplemental Indenture of Mortgage". The Collector of Stamp, District - Singrouli vide order dated 23.06.2014 referring to clauses D, E and F of the Fifth Supplemental Indenture of Mortgage dated 19.06.2014 (Annexure P-2) concluded that instrument in question does not qualify for the concession granted under Article 38(c) of the Schedule 1-A of Indian Stamp Act, 1899 ( hereinafter referred to as Act of 1899). Rather, it creates a new mortgage as defined in Section 2(17) of the Act of 1899. Therefore, the instrument is chargeable with stamp duty of Rs.5 Lacs along with Janpad Shulk of Rs.5 Lacs. Since, the petitioner has affixed the stamp of Rs.1,000/- only, the instrument is insufficiently stamped. The Collector of Stamp in exercise of power under Section 40(b) of the Act, 1899 imposed penalty of Rs.99 Lacs and directed the petitioner to deposit Rs.1,09,89,000/- within thirty days.
The order of the Collector of Stamp was assailed by the petitioner in Revision under Section 56 (4) of the Act, 1899 before the Board of Revenue. The Board of Revenue set aside order of the Collector of Stamp holding that the instrument is collateral and auxiliary to the main Mortgage in view of Clause 8 of the original Mortgaged Deed dated 2.6.2014. All the subsequent supplementary mortgage instruments dated 03.8.2011 and 24.12.2011 were charged with fixed stamp duty of Rs.250/- treating them collateral and supplementary instruments. Therefore, the instrument deserves to be charged with stamp duty as per Article 38 (c) of Scheduled 1-A of the Indian Stamp Act, 1899.
3. Learned counsel for the petitioner, in addition to the facts and grounds mentioned in the petition, contends that the instrument in question i.e. "Fifth Supplemental Indenture of Mortgage" dated 19.06.2014 (Annexure P-2) is an independent deed of mortgage, whereby the land allotted to Sasan Power Project on 13.06.2014 was mortgaged for the first time. Further, the instrument in question adds property to the existing mortgaged by creating fresh mortgage over the existing mortgage for the benefit of scheduled Secured Parties including the Hedge Counter-parties. Therefore, it cannot be construed as "auxiliary or supplemental" mortgage. The Collector of Stamps considering these aspects of the matter and after proper construction of the terms of the instrument committed no error in holding that the instrument does not qualify for the concession laid down in Article 38 (c) of Schedule 1-A of the Act, 1899. The instrument being a fresh mortgage is chargeable in accordance with Notification dated 24.09.2007 of the Government of M.P. and accordingly, proper penalty was imposed under Section 40(b) of the Act. The Board of Revenue committed an error in reversing the order of Collector of Stamps without assigning proper reasons considering the clauses of the instruments in question. It is further contended that no reason is assigned by the Board of Revenue for concluding that the instrument in question falls under Article 38 (c) of the Scheduled 1A. The impugned order suffers from manifest illegality.
4. Per contra, learned Senior counsel for the respondent, referring to the instrument in question, submits that the instrument itself states that it is in furtherance of already executed mortgaged deeds. Th
