CHATURBHUJ DAS Vs. STATE OF MADHYA PRADESH

JUDGEMENT

(1.) This reference is made by the Chief Controlling Revenue Authority (Board of Revenue) Madhya Pradesh Gwalior, under Section 57, Stamp Act (for short 'the Act').

(2.) The material facts giving rise to this reference briefly stated are as follows : Shri Shankarshan Das son of Munshiram Vithal acting as the karta of the joint Hindu family of Munshiram Gopalji Viththaldasji mortgaged the joint Hindu family property known as Krishna Ginning Factory including the land situate at Zinga Khoh, Agar, -- District Shajapur with Shri Ramkishan Goyal by a duly registered mortgage deed dated 19-4-1957. Shri Ramkishan Goyal granted a lease of the mortgaged property to M/s. Jain Brothers, a registered partnership firm of Agar, with the consent of the mortgagor and delivered possession thereof to M/s. Jain brothers. On 6-5-56 the mortgagor created a second mortgage of the mortgaged property for Rs. 2000/- in favour of M/s. Jain brothers. This mortgage was as usufructuary mortgage. As per terms of the mortgage deed, the mortgagees were entitled to remain in possession of the mortgaged properly till 30-8-1977. It was also stipulted in the mortgage deed that the mortgagees would be entitled to spend any amount for making improvements to the mortgaged property and if any such amount was spent on improvements the mortgagors would pay interest thereon at the rate of 7 per cent per annum before redemption. The mortgagees spent a sum of Rs. 70,000 on the improvements to the mortgaged property with the consent of the mortgagors. The mortgagors then transferred their equity of redemption by a deed of sale dated 16-6-1970 for a sum of Rs. 18,000 in favour of the mortgagees M/s. Jain brothers. This deed was executed on stamps worth Rs. 810 and was presented for registration before the Sub-Registrar Agar. The Sub- Registrar impounded the document and referred the matter to the Sub- Divisional Officer, Agar, for considering the question of stamp duty payable on it. The Sub-Divisional Officer after hearing the executants, held that the instrument was not correetly valued and that it should have been valued at Rs. 18,000 plus Rs. 70,000 the amount spent by the mortgagees on improvements to the mortgaged property and stamp duty paid on the instrument was defieicnt by Rs. 3,406. The Sub-Divisional Officer, therefore, directed that the deficit stamp duty be recovered from the vendors together with an equal amount as penalty. The vendors submitted a revision before the Chief Controlling Revenue Authority against the order of the Sub-Divisional Officer. The learned Member of the Board of Revenue exercising jurisdiction under Section 56 of the Act passed an order further enhancing the duly and penalty chargeable on the instrument. Thereafter the Sub-Divisional Officer issued a notice to the vendors for the recovery of Rs. 4536.50 p. as stamp duty and equal amount us penalty. The vendors then filed a petition under Article 226 of the Constitution challenging the recovery of the amount of duty and penalty. This petition, which was registered as M. P. No. 43 of 1972, was allowed by this Court by order passed on 22-3-1975. This Court directed the Chief Controlling Revenue Authority to state a case to this Court under Section 57 of the Act. Accordingly the Chief Controlling Revenue Authority has made this reference.

(3.) The finding of fact recorded by the Chief Controlling Revenue Authority are these: The vendors executed a deed of mortgage for Rs. 2,000 in favour of M/s. Jain brothers. It was a usufructuary mortgage and possession of the mortgaged property was delivered to the mortgagees. Under the terms of the mortgage deed the mortgagees were entitled to spend money on improvements to the mortgaged property and the mortgagors agreed to pay interest at 7% per annum on the amount spent by the mortgagees on such improvements. The amount spent on the improvements to the mortgaged property and the interest thereon became a charge, on the mortgaged property. On these facts the Chief Controlling Revenue Authority expressed the opinion that the sale deed was chargeable to stamp duty on the original mort gage amount of Rs. 2,000 plus Rs. 70,000 being costs of improvements plus 7% interest calculated according to conditions 8 and 9 of the mortgage deed plus Rupees 18,000 being the consideration of the sale of the equity of redemption by the mortgagors.