Case: Board Of Revenue, Uttar Pradesh Vs. Rai Saheb Sidhnath Mehrotra

altogether frustrated and defeated. A proprietor has an estate worth? 20,000. There is a bond upon it for? 10,000. He sells that estate, and the purchaser pays to him a difference between the amount of the bond and the value of the estate, so that the bond being for? 10,000 he pays? 10,000. The day after he obtains infeftment he pays off the bond. Well the practice results of that is that he has paid? 20,000 as the purchase money of this estate, and he has obtained a conveyance with an ad valorem stamp of the value of? 10,000. That is a simple defeating of the purpose and intention of the Legislature, as expressed in this clause, and therefore, I think, upon the plain meaning of this section, that there was no intention whatever to go back upon the enactment of the 16 and 17 Vic., and to restore the enactment of the 55 Gen. III, which is what the liquidators are contending for. On the contrary, it seems to me that the 73rd Section plainly intended to continue the provision of the statute 16 and 17 Vict."9. The next point that needs determination is : What does the phrase "sale of property subject to a mortgage" mean? Does this phrase mean that whenever mortgaged property is sold the explanation applies or does it imply that if mortgaged property is sold subject to the mortgage then and then only the explanation applies? In our view, the correct meaning is the latter meaning. Let us see what would be the position if A, instead of selling property as in illustration 2, adopts the following mode of selling. A sells property to B for Rs. 1700, which is subject to mortgage to C for Rs. 1,000 and unpaid interest Rs. 200. A agrees that Rs. 1200 be paid to C and Rs. 500 to him. If the first meaning is adopted, the consideration on which the stamp duty would be leviable would be Rs. 1700, which is the consideration expressed in terms of Art. 23, and Rs. 1200 deemed to be consideration within S. 24; the total amounting to Rs. 2900. In our opinion this result could never have been intended. We agree with the decision of the Calcutta High Court in ILR 58 Cal 33 : (AIR 1931 Cal 193 FB) and of the Bombay High Court in Waman Martand Bhalerao v. Commissioner Central Division, ILR 49 Bom 73 : (AIR 1924 Bom 524 ) that the phrase "subject to a mortgage or other encumbrance" in the explanation to S. 24 qualifies the word sale and not the word property. We need hardly say that the Stamp Act is a taxing statute and must be construed strictly, and if two meanings are equally possible, the meaning in favour of the subject must be given effect to.10. Before we considered the facts of this case, we may mention that it is plain from the explanation that it is only the unpaid mortgage money that is deemed to be part of the consideration. If the mortgage money has been paid off by the date of the conveyance the explanation does not require it to be added to the consideration. If the mortgage money has been paid off by the vendee before the date of the sale, as part of the consideration, it would be included in the amount leviable with stamp duty under Art. 23, but not under the explanation. The conveyance deed would, in the above eventuality, recite the fact that so much money has been paid to the mortgagee and it would be the consideration expressed in the deed.11. Let us now apply the law as explained above to the facts of this case. On December 15, 1952, the date when the deed was executed Rs. 3,89,000 had already been paid by the vendees to the Bank. Mr. Aggarwal contends that this amount should be included because it was consideration moving from the vendees. He says that stamp duty cannot be avoided by the simple: device of paying money before a conveyance is executed. He is right in this but he must show that Rs. 3,89,000 was an advance payment for the immovable property conveyed by the deed dated December 15, 1952. It is quite clear from the terms of the deed that Rs. 4,55,000 was to be paid for items other than the immoveable property conveyed by the said deed and the sum of Rs. 3,89,000 had nothing to do with the immoveable property. The payment of Rs. 3,89,000 to the Bank left outstanding Rs. 1, 11,000 as mortgage money. Rs. 1,00,000 is expressed to be the consideration for the conveyance of the immovable property, and therefore, falls within Art. 23. This leaves Rs. 11,000, and the question arises whether this sum should be taken into consideration for the purpose of levying stamp duty. Regarding this item, the High Court held as follows :"It is true that till the date of sale the sum of Rs. 11,000 had not been paid and there was a charge on the property in respect of that amount. The vendors themselves had, however, taken liability for that amount and had agreed to pay it. It had been expressly provided in the sale deed that property was being sold free from the charge. The vendees were in no way liable for the amount and had not undertaken to pay it. In these circumstances the property cannot be said to have been sold subject to the charge of Rs. 11,000 and if it was not being sold subject to that charge, the Explanation to section 24 becomes inapplicable. "12. It has already been noticed that this sum of Rs. 11,000 forms part of the price for items other than the immoveable property. Mr. Aggarwala has not seriously controverted the finding of the High Court on this point. Accordingly, we hold that this sum of Rs. 11,000 cannot be included for the purpose of levying stamp duty.13.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]Does this phrase mean that whenever mortgaged property is sold the explanation applies or does it imply that if mortgaged property is sold subject to the mortgage then and then only the explanation applies? In our view, the correct meaning is the latter meaning. Let us see what would be the position if A, instead of selling property as in illustration 2, adopts the following mode of selling. A sells property to B for Rs. 1700, which is subject to mortgage to C for Rs. 1,000 and unpaid interest Rs. 200. A agrees that Rs. 1200 be paid to C and Rs. 500 to him. If the first meaning is adopted, the consideration on which the stamp duty would be leviable would be Rs. 1700, which is the consideration expressed in terms of Art. 23, and Rs. 1200 deemed to be consideration within S. 24; the total amounting to Rs. 2900. In our opinion this result could never have been intended. We agree with the decision of the Calcutta High Court in ILR 58 Cal 33   : (AIR 1931 Cal 193   FB) and of the Bombay High Court in Waman Martand Bhalerao v. Commissioner Central Division, ILR 49 Bom 73 : (AIR 1924 Bom 524  ) that the phrase "subject to a mortgage or other encumbrance" in the explanation to S. 24 qualifies the word sale and not the word property. We need hardly say that the Stamp Act is a taxing statute and must be construed strictly, and if two meanings are equally possible, the meaning in favour of the subject must be given effect to.Before we considered the facts of this case, we may mention that it is plain from the explanation that it is only the unpaid mortgage money that is deemed to be part of the consideration. If the mortgage money has been paid off by the date of the conveyance the explanation does not require it to be added to the consideration. If the mortgage money has been paid off by the vendee before the date of the sale, as part of the consideration, it would be included in the amount leviable with stamp duty under Art. 23, but not under the explanation. The conveyance deed would, in the above eventuality, recite the fact that so much money has been paid to the mortgagee and it would be the consideration expressed in thehas already been noticed that this sum of Rs. 11,000 forms part of the price for items other than the immoveable property. Mr. Aggarwala has not seriously controverted the finding of the High Court on this point. Accordingly, we hold that this sum of Rs. 11,000 cannot be included for the purpose of levying stamp duty.