Case: Chief Controlling Revenue Authority Vs. Costal Gujarat Power Ltd.

5. The respondent is a Company named Coastal Gujarat Power Ltd and it needed financial assistance for setting up an Ultra Mega Power Project in the area ofand for that purpose it secured assistance from few lenders. The lenders i.e. financial institutions, which were thirteen in number, formed a consortium as a trust and executed a security trustee agreement (STA) inter se appointing one banker, viz. the State Bank of India as the lead trustee, called the security trustee. The duties of the security trustee are carved out in the said agreement of security trustees.6. The respondent executed anof Mortgage for Delayed After Assetswith the State Bank of India, the said security trustee, mortgaging its assets as mentioned in the deed itself. The said document was presented for registration before theMudra, by paying stamp duty of Rs.4,21,000/and the deed was registered.7. According to the appellant, the respondent was liable to pay Rs. 54,62,000/on the said deed and, hence, demanded the balance amount of Rs. 50,41,000/from the respondent by issuing show cause notice dated 5.11.2009. The issue was forwarded for consideration of the Deputy Collector, Stamp Duty Valuation Organisation,The revision application filed by the respondent under Section 53[1] of the Act was dismissed vide order dated March, 28, 2011. The respondent thereafter made an application under Sectionof the Act thereby giving rise to the Reference Proceedings.10. By way of the Reference, the opinion of the High Court was sought on the questions referred hereinabove.11. The High Court opined that the State of Gujarat is not entitled to recover any additional stamp duty based upon its perception of the legislative intendment behind Section 5 of the Act. The Court noted that stamp duty is payable on instruments and not on transactions. Therefore, merely because the intended effect was achieved by executing one single document as against different sets of documents, such fact would not enable the State authorities to justify the conclusion that the one single document falls under the purview of Section 5 of the Act. It was SBI alone which had the power to enforce the document against the respondent. The High Court further opined that there being only one instrument creating a mortgage by a borrower in favour of a security trustee, such relation between the borrower and security trustee is independent of the relationship between the borrower and the lending banks. The relationship between the borrower and the security trustee is that of a mortgagor and mortgagee. By taking aid of the provision of the Indian Trust Act and after creation of a different valid trust deed and making payment ofthereon in accordance with law, the State Bank of India became the security trustee of the lending Banks and held the mortgage for and on behalf of those beneficiaries. Therefore, by the instrument in question, either fictionally or otherwise, no separate or distinct matters or transactions are created. Thus, the applicant is the mortgagor and the S.B.I., in the capacity of a trustee, is the mortgagee. The instrument does not involve eitherso as to attract Section 5 of the Act. The Court found from the document in question that the State Bank of India is the only mortgagee under the instrument and no rights in the mortgaged property had been created in favour of secured parties or any other persons.12. The High Court further opined that the principles laid down in The Member, Board of Revenue vs. Arthur Paul Benthall, 1955 SCR 84, can be of no assistance to the State in this case. Indisputably, nobody disputed that the instrument in question is a mortgage deed and that according to the provisions of the Act, the same should be charged in accordance with the schedule 1. Thus, by no stretch of imagination, the said mortgage deed is treated as a combination of thirteen lenders by taking aid of the above principles. Finally, the Full Bench held that on consideration of the entire materials on record, the reference was answered as Point [A] No and Point [B] yes.13. Hence, the present appeal by special leave.

Court's reasoning:
22. From the body of this agreement, it reveals that the borrower had requested the senior lenders i.e. thirteen banks/financial institutions to make available to the borrower loan details of which is more fully set out in Schedule II. Pursuant to the loan agreement entered into by the borrower and the senior lenders, each of senior lenders inter alia agreed to provide to the borrower credit and loan facilities to finance part of the project, costs of the project, more specifically set out in Schedule II.From the facts discussed and narrated hereinabove, it is manifest that the instrument of mortgage came into existence only after separate loan agreements were executed by the borrower with the lenders with regard to separate loan advanced by those lenders to the respondent borrower. The mortgage deed which recites at length as to how and under what circumstances property was mortgaged with the security trustee for and on behalf of lender bank.From bare reading of these provisions, it is clear that Section 4 deals with single transaction completed in several instruments, whereas Section 5 deals only with the instrument which comprises more than one transaction and it is immaterial for the purpose whether those transactions are of the same category or of different categories.32. It appears from the trustee document that altogether 13 banks lent money to the mortgagor, details of which have been described in the schedule and for the repayment of money, the borrower entered into separate loan agreements with 13 financial institutions. Had this borrower entered into a separate mortgage deed with these financial institutions in order to secure the loan there would have been a separate document for distinct transactions. On proper construction of this indenture of mortgage it can safely be regarded as 13 distinct transactions which falls under Section 5 of the Act.We have also gone through the provisions contained in Sections 33, 39, Article 6 and 6(b) of the Act as also Bombay Stamp (Gujarat Second Amendment) Rules, 2007 and the Circular dated 2.4.2007. After giving out anxious consideration to those provisions and also in the light of the ratio decided by the Constitution Bench of this Court in The Benthall case (supra), we are of the definite opinion that the High Court has committed serious error of law in interpreting the provisions of Sections 5 and 6 of the Act. Consequently, the answer given by the High Court on the Reference cannot be sustained in Law.