CHITTAVALASA JUTE MILLS LTD Vs. COMMR OF SURVEY

JUDGEMENT

(1.) On 20-12-1976 a document was presented to the Sub-Registrar, Bheemunipatnam by the Chittavalasa Jute Mills, the petitioner before us, for registration. The document was engrossed on a stamp paper of Rs. 5/-. But the document was styled as a 'deed of hypothecation' for Rs. 10 lakhs. Therefore, the Sub-Registrar impounded the document and referred the matter to the District Registrar, Visakhapatnam, for classification of the document and chargeability of the document with stamp duty. The District Registrar by his order dt. 11-3-1977 held it was a mortgage without possession for Rs. 10 lakhs and was chargeable with stamp duty of Rs. 30,000/- under Art.35(b) of Sch. I-A of the Indian Stamp Act, 1899 (hereinafter referred to as 'the Act'). He therefore ordered the recovery of the deficit stamp duty of Rs. 29,995/- and a penalty of Rs. 1,000/-, a total of Rs. 30,995/- under S.40 of the Act, and informed the Sub-Registrar accordingly. Aggrieved against the said order, the Managing Director, Chittavalasa Jute Mills preferred a revision before the Commissioner of Land Revenue and Chief Controlling Revenue Authority under S.56(1) of the Act. The Chief Controlling Revenue Authority confirmed the order of the District Registrar and dismissed the revision petition. A petition filed by the petitioner for a reference under S.57(1) of the Act was also unsuccessful. Therefore, the petitioner invoking the extraordinary jurisdiction under Art.226 of the Constitution filed a writ petition, W. P. No. 4198 of 1977 seeking a direction from the High Court to the Chief Controlling Revenue Authority to state the case and refer the question, namely, whether the document in question is an agreement as contended by the executants falling under Art.6 of Sch. I-A or is a mortgage deed as defined under S.2(17) of the Act, for the opinion of the High Court. The High Court allowed the writ petition and directed the Chief Controlling Revenue Authority and Commissioner of Survey Settlement and Land Record to make a reference to the High Court as the case involves a substantial question of law. Accordingly the Chief Controlling Revenue Authority referred the following question for our opinion : "Whether on the facts and in the circumstances the deed of hypothecation dated 17-1-1977 entered into between the petitioner and the A. P. Financial Corporation falls under item 6 or 35(b) of the Sch. I-A of the Stamp Act, 1899."

(2.) To anwer the question, it is necessary to look at the definition of 'mortgage deed' in the Act itself. S.2(17) defines 'mortgage deed' as follows :

(3.) The deed itself as described as a deed of hypothecation for a sum of Rs. 10 lakhs of loan to be advanced by the Corporation to the borrower-Company. A charge is created on the land and buildings, mortgaging separately under an equitable mortgage by deposit of title deeds and upon all the assets of the borrower-Company. There is an assignment to the Corporation of the rights of the borrower-Company to receive all moneys. What is more, there is a clause for reconveyance of the land and buildings, plant and book debts and other assets and good-will to the borrower-Company. These recitals of charge on the assets, movable and immovable of the borrower-Company and reconveyance of buildings and plant clearly point to one and the only conclusion that the document described as a deed of hypothecation is a mortgage deed as defined under S.2(17) of the Act.