C.R. No.657 of 2006 -1- IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH C.R. No.657 of 2006 Date of Decision: 08.10.2009 Mongi Lal .....Petitioner Versus The State of Punjab and another ...Respondents Present: Mr. Sukhdeep Singh Brar, Advocate for the petitioner. Ms. Monica Chhibbar Sharma, DAG, Punjab. CORAM:HON'BLE MR. JUSTICE K. KANNAN 1. Whether Reporters of local papers may be allowed to see the judgment ? 2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest? -.- K. KANNAN J.(ORAL) 1. The orders, which are assailed in revision are a direction given by the Collector, Gurdaspur to the mortgagor to pay additional duty of Rs.1,13,385/- as duty payable on a simple mortgage deed in purported exercise of powers under Section 47-A of the Indian Stamp Act of 1899 and the subsequent order of Commissioner, Jalandhar confirming the Collector's order. The document had been admittedly registered as a simple mortgage for securing a loan of Rs.57,50,000/- with Indian Overseas Bank. The clause 1, after setting out the preamble of the simple mortgage deed reads as follows:- “In consideration of the mortgagee bank, having agreed to grant term loan of Rs.46,50,000/- (rupees forty six lacs and fifty thousand only) and cash credit C.R. No.657 of 2006 -2- hypothecation limit of Rs.11,00,000/- (rupees eleven lacs only to the borrower/party of 2nd part, the mortgagor/party of Ist part hereby mortgages the land described in the schedule of property given below, with an intention that the same shall remain subject to the charge of the mortgagee bank, as security for the said loan of Rs.46,50,000/- and cash credit hypothecation limit of Rs.11,00,000/- along with interest @15.50 per cent per annum on monthly basis, together with costs, insurance premium and other charges as per the agreement between the mortgagee bank and borrower, as reflected in the account of the borrower in the books of mortgagee bank.” 2. In clause 4 of the same document, the mortgagor has made a covenant with the mortgagee that the land mortgaged with the bank to secure a loan of Rs.57,50,000/- was made with intention that the land shall remain mortgaged and subject to charge of mortgagee bank till the complete repayment of the entire outstanding amount, standing due and outstanding payable by the borrower. Para 6 of the simple mortgage deed allows the mortgagor to retain possession of the property and cultivate the land. The stamp duty that had been originally collected on the document appears to have been Rs.11,500/- but later as the impugned order of the Collector shows, the Sub-Registrar, Gurdaspur had made a reference to the Collector about the stamp C.R. No.657 of 2006 -3- duty and the registration fee, which was deposited. The order of the Collector recites that the Sub-Registrar had reported that an audit party has shown a balance of amount to be collected, as required to be done under Article 40 (b) of the Indian Stamp Act of 1899. A clarification had been sought by the Sub Registrar that resulted in the proceedings to be issued by the Collector, Gurdaspur for recovery of deficit stamp duty. The mortgagor sought to defend the adequacy of stamp duty by reference to Article 40 (c) and contended that only half a per cent of duty was leviable which had been done and there was no deficit in payment of duty. The Collector rejected the contention and directed the collection of duty as per Article 40 (b). This order of the Collector was challenged before the Commissioner, Jallandhar Division, Jallandhar who affirmed the order of the Collector and dismissed the appeal. The decisions passed by the Collector and the Commissioner have now been challenged in civil revision. 3. Learned Counsel appearing on behalf of the petitioner took me through the relevant provisions under Article 40 that is the charging Section for levy of duty for simple mortgagors. Article 40 reads as follows: “Mortgage Deed, not being [AN AGREEMENT RELATING TO DEPOSIT OF TITLE-DEEDS, PAWN OR PLEDGE (No.6)] BOTTOMRY BOND (No.16), MORTGAGE OF A CROP (No.41), RESPONDENTIA BOND (No.56), OR SECURITY BOND (No.57)- C.R. No.657 of 2006 -4- (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; The same duty as a Conveyance (No.23) for a consideration equal to the amount secured by such deed. (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 property mortgaged or part thereof, is deemed to give possession within the meaning of this Article. The same duty as a Bond (No.15) for the amount secured by such deed. (c) when a collateral or auxiliary or additional or substituted security, or by way of further assurance for the above mentioned purpose where the principal or primary security is duly stamped- for every sum secured not exceeding Rs.1,000; Rs.10/-. and for every Rs.1,000 or part thereof secured in excess of Rs.1,000. Rs.10/- Exemptions (1) Instruments, executed by persons taking advances under the Lands Improvement Loans Act, 1883 (10 of 1883), or the Agriculturists' Loan Act, 1884 (12 of 1884) or by their sureties as security for the repayment of such advances. (2) Letter of hypothecation accompanying a bill of exchange. 4. According to the learned counsel for the petitioner, the property was admittedly not handed over and it was offered as only collateral or auxiliary or additional or substituted security and therefore, only Article 40 (c) must be operative. According to him, the undertaking in the mortgage by the mortgagor itself must be taken as the primary security and the property which was offered as a mortgage was a collateral security and therefore, Article 40 (c) would operate. In my view, such an interpretation is not warranted C.R. No.657 of 2006 -5- for, Article 40 (c) will be attracted only in cases where there is already a primary security and such primary security is duly stamped. If an additional or auxiliary security or a substituted security is made through an instrument, it is then that Article 40 (c) will be attracted. The reference to primary security cannot be a personal undertaking for, the Section itself contemplates a primary security which is “duly stamped”. It is nobody's case that there was any other bond on the security of the same property and stamp duty had been collected. If the property had been handed over possession to the mortgagee, then Article 40 (a) would be attracted. If the property is held back by the mortgagor, it will be Article 40 (b) and in a case where a property is retained by the mortgagor and a primary security had already been granted to the mortgagee and the property is again offered as an additional security or a collateral security or auxiliary, it is then that Article 40 (c) will operate. Instruments of sub- mortgages or puisne mortgages will be instances, which will be attracted to Article 40 (c) and the property which is offered as a security by the mortgagor to the mortgagee for the first time shall attract only Article 40 (b). The assessment by the Collector, under the circumstances, was appropriate and the duty collected by the registering officer was erroneous and required to be corrected. 6. Learned counsel appearing for the petitioner refers to a decision of this Court in Abhinav Kumar Vs. State of Haryana and others 2001 (1) RCR (Civil) 91 to the effect that the C.R. No.657 of 2006 -6- Registering Officer cannot make a reference after 8 days of registering the instrument. The said decision also refers to an earlier ruling in Civil Revision No.4412 of 1998, Vijya Ram Vs. State of Haryana and others stating that the consistent view of this Court is that there is no provision under the Stamp Act wherein deficit stamp duty could be recovered by the registering authority either from the vendor or from the vendee subsequent to and after the registration of the sale deed. The consistent authority as cited in the judgment is no doubt a correct statement of law. However, it is the applicability of the correct position was, in my humble view wrongly applied in Abhinav Kumar 's case (supra). The Registering Officer cannot demand an additional duty after the registration is made but the Collector's power to demand deficit and security is available under Section 47A (3) of the Stamp Act. The "Registering Officer" mentioned in Section 47A(1) and the "Collector" mentioned in Section 47A(3) of the Stamp Act are distinct authorities with different powers. The decision in Abhinav Kumar's case (supra) conflicts with bare reading of statutory provision and does not, in my humble view, state the law correctly. The Collector's power to demand and secure the deficit is available for a period of five years, which can be either on his own motion or on a reference. Section 47A(1) and Section 47A(3) of the Stamp Act are reads as follows: "Section 47-A. Instruments under-valued, how to be dealt with. - (1) If the Registering Officer, appointed under the Registration Act, 1908, while registering any C.R. No.657 of 2006 -7- instrument, has reason to believe that the market-value of the property, which is the subject-matter of such instrument, has not been truly set forth in the instrument, he may after registering such instrument, refer the same to the Collector for determination of market-value of such property and the proper duty payable thereon. (2) ................. (3) The Collector may, suo motu, within five years from the date of registration of any instrument, not already referred to him under sub-section (1), call for and examine the instrument for the purpose of satisfying himself as to the correctness of the market-value of the property, which is the subject matter of any such instrument, and the duty payable thereon and if, after such examination he has reason to believe that the market value of such property has not been truly set forth in the instrument he may determine the market-value of such property and the duty as aforesaid in accordance with the procedure provided for in sub-section (2). The difference, if any, in the amount of duty, shall be payable by the person liable to pay the duty: Provided that nothing in this sub-section shall apply to any instrument, registered prior to the date of the commencement of the Indian Stamp (Madhya Pradesh Amendment) Act, 1975." 7. The registration of the mortgage was made on 28.08.2002 and the proceedings of the Collector taken within the stipulated period provided under Section 47A (3) is perfectly valid. 8. The orders of the Collector and the Commissioner are maintained and the civil revision petition is dismissed. No costs. (K. KANNAN) JUDGE October 08, 2009 Pankaj*