MURUGHARAJENDRA CO Vs. CHIEF CONTROLLING REVENUE AUTHORITY

JUDGEMENT

(1.) The above case Arises out of a reference made by the Chief Controlling Revenue Authority under S.54 of the Mysore Stamp Act, 1957, (hereinafter referred to as the Act) . The question for consideration in this case is whether a document addressed by Mjs Murugharajendra Co. for and on behalf of itself and Sri Shankara Textile Mills Ltd. Davangere (hereinafter referred to as the mortgagors) in favour of the Manager, State Bank of Mysore (hereinafter referred to as the mortgagee) is liable for stamp duty under Art.6 of the Schedule of the Act.

(2.) The facts leading to the above reference are these: The mortgagors had borrowed from the mortgagee a sum of Rs. Six lakhs under an equitable mortgage dt.10-10-1960 In that connection they had deposited with the mortgagee, the title deeds relating to certain immovable properties. In January 1965, the mortgagor approached the mortgagee to advance an additional sum of Rs. Five lakhs under an equitable mortgage on the security of the title deeds already deposited by them under the first mortgage. The mortgagee having agreed to advance the sum the mortgagors got a resolution passed on 29-1-1965 of the Board of Directors of Sri Shankara Textile Mills Ltd. authorising its Managing Agents M/s Murugharajendra Co. to borrow an additional sum of Rs.Five lakhs under an equitable mortgage on the security of the title deeds already deposited with the mortgagee under the first mortgage. On 30-1-1965 they wrote a letter to the mortgagee which reads as follows : We, M/s Murugharajendra Co., a registered firm, the duly appointed Managing Agents of Sree Shankara Textiles Mills Ltd. Davangere, as agreed upon in person and being duly authorised by Resolution No. (10) iii passed by the Board of Directors of the Co. on 29-1-1965, true copy whereof is enclosed herewith, have deposited this day (the title deeds is enclosed hereto, have deposited this day), the title deeds relating to the fixed assets of the said Company, consisting of lands, buildings and installed machinery , as per list enclosed to the memorandum of mortgage by deposit of title deeds, for the repayment of Rs. Six lakhs with interest thereon, executed by us on 10-10-1960, and agreed that your bank may continue to hold the said title deeds as security by way of equitable mortgage for the due repayment on demand with interest at 3i per cent more than the Reserve Bank of India rate with a minimum of 81/2 per cent of the additional sums further advanced and to be advanced to the extent of Rs. Five lakhs. List of title deeds : for Sree Shankara Textile Mills, for Murugharajendra Company, Sd|. Partner, Managing Agents. After the above letter was written, the Registrar of Companies was requested to register the mortgage u/s.125 of the Companies Act. Along with the documents filed before him, a copy of the letter dt.30-1-1965 exrtacted above was also filed. On going through the said letter, the Registrar of Companies, being of the opinion that the letter was liable for stamp duty under Art.6 of the Act, impounded the same and forwarded it to the Deputy Commissioner, Chitradurga, for recovery of duty and penalty.

(3.) The Deputy Commissioner in his turn referred the matter to the Asst. Commissioner, Davangere. The Asst. Commissioner having felt doubt as to the stamp duty with which the document was chargeable, drew up a statement of the case and referred it with his own opinion for the decision of the Chief Controlling Revenue Authority under S.53(2) of the Act The Chief Controlling Revenue Authority held that the document was liable to stamp duty under Art. 6 of the Act, as according to him the document was an instrument evidencing an agreement relating to the deposit of title deeds. Thereafter, the Assistant Commissioner intimated the Registrar of Companies that stamp duty of Rs. 2,025 together with a penalty of Rs. 10 was recoverable from the mortgagors. The mortgagors having credited, under protest, the duty and penalty referred to above, filed a writ petition in WP. No. 1585 of 1967 on the file of this Court questioning the correctness of the above order. This Court by its order passed in the writ petition, directed the Chief Controlling Revenue Authority to make a reference under S.54 (l) of the Act. Pursuant to the said direction, the Chief Controlling Revenue Authority has made the above reference.