JAIKA AUTOMOBILES PVT LTD Vs. JOINT DISTRICT REGISTRAR

JUDGEMENT

(1.) By this writ petition under Articles 226 and 227 of constitution of India, the petitioner, a private limited company has challenged the order dated 5/8/2005 passed by Chief Controller, Revenue Authority i. e. respondent No. 2 herein as also the demand notice issued by first respondent No. 1 dated 1/1/2005 under the provisions of Bombay Stamp Act, 1958 (hereinafter referred to as Stamp Act). Considering the nature of controversy, I have heard parties finally by consent at the stage of admission itself. I have heard Advocate S. V. Manohar for petitioner and learned AGP Advocate mrs. Taiwade for respondents.

(2.) The facts are not in dispute. The sister concern of petitioner by name M/s Jaika motors (independent company) raised loan from United Commercial Bank worth Rs. 7 crores. Rs. 5 Crores was against hypothecation of stocks while Rs. 2 Crores was against book debts of the other company. Said concern executed two deeds of hypothecation, one in relation to stocks and movable while the other in relation to book debts. A Security cum Mortgage Bond was then executed by petitioner in relation to immovable property as collateral security for that loan. Petitioner paid stamp duty under provisions of Article 40 (c) of Schedule-I of stamp Act treating it as collateral security. All these three documents are executed on 23. 08. 2002. The audit parry of Accountant general (II) found short levy of stamp duty worth Rs. 5,26,300/ -. The Collector of stamps accepted this audit objection and issued order dated 1 /1/2005 demanding said amount with 2 % interest from the date on document. This order was challenged by petitioner by filing appeal under section 53 (1-A) of Stamp Act. The respondent No. 2/appellate Authority on 5/8/2005 has dismissed this appeal observing that Article 40 (c) was not attracted as on earlier documents Stamp duty under Article 40 (a) or (b) of Schedule-I has not been paid. After considering provisions of section 4 of Stamp Act, it has been observed that the document chargeable with highest duty is to be considered for payment of stamp duty. The order of Collector dated 1/1/2005 has therefore been maintained.

(3.) Learned Counsel for petitioner contended that parties have treated hypothecation agreements as principal document and as per Government Notification dated 6/5/2002 stamp duty of Rs. 1,73,500/-has been duly paid on it. The petitioner has given Security Bond cum Mortgage deed for financial assistance to another company M/ s. Jaika Motors. It being collateral security, article 40 (c) applied and stamp duty has been paid upon it as per law. It is contended that when parties determined for themselves that hypothecation deed shall be the principal document, respondent No. 2 could not have treated the collateral security as principal document. Reliance has been placed upon article 54 which prescribes that where the collateral or auxiliary or additional security by way of further assurance is given and where the principal or primary security is duly stamped, maximum duty payable upon such collateral/auxiliary/additional security will Rs. 200/- only.