BOARD OF REVENUE, UTTAR PRADESH versus RAI SAHEB SIDHNATH MEHROTRA

Citation: [1965] 2 S.C.R. 269 · Decided: 26-11-1964 · Supreme Court of India · Bench: P.B. GAJENDRAGADKAR · Disposal: Dismissed
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Judgment (excerpt)

A 
BOARD OF REVENUE, UTIAR PRADESH 
"· 
RAI SAHEB SIDHNAm MEHROTRA 
November 26, 1964 
B 
[P. B. GAJENDRAGADKAR, C.J., M. HIDAYATULLAH, 
J. C. SHAH, S. M. Suw AND R. S. BACHAWAT, 11.) 
TM Indian Stamp Act, s. 24, Exp/anatiort--Duty whether payable on 
mortgage-Money pajd before conPeyance of the property. 
Certain propertie! were sold by sale-deed dated 15th December 1952. 
The vendors, of whom the respondent was one, had equitably mortgaged 
C 
theee properties with the Chartered Bank of India. 
In order to pay off 
the mortgage debt to the Banlt the vendors entered into a contract with 
Ml•. Oil Corporation of India Ltd. for the sale of the mortgaged property 
consisting of lands, buildings, plants, machinery, shares, goodwill etc., for 
a sum of Rs. 5,55,000. The Chartered Bank agreed to release from iis 
charge the properties to be conveyed to the vendces prmided a sum of 
Rs. 500,000 was paid to it. The vendees agreed to pay the said Bank e 
sum of Rs. 4,89,000 while the vendors agreed to pay Rs. 11,000 to make 
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up the balance. 
In pursuance of this agreement the vendors handed over 
the possession of the plant and machinery of the two factories to the 
vendees, who paid Rs. 3,89,000 to the said Bank before the date on which 
the sale-deed was executed, and Rs. I 00,000 after the execution of the 
deed. The Stamp duty was paid only on the last mentioned sum. In a 
reference under s. 57 of the Indian Stamp Act the High Court held that 
the Stamp Duty was correctly paid. 
The Board of Revenue U.P. appealed 
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to the Supreme Court by special leave. 
It was contended on behalf of the appellant, relying on the explana-
tion to s. 24 of the Act that the duty was payable not only on Rs. 100,000 
as actually paid but also on the rest of the sale price. 
HELD : ( i) From the Explanation to s. 24 it is plain that it is only 
the unpaid mC>rtgalll' money that it deemed to be part of the consideration. 
U the mortgage money has been paid off by the date of the conveyance the 
I' explanation does not require it to be added to the consideration. The 
phrase 'subject to the mortgage or other encumbrance' qualifies the word 
'sale' and not the word 'property'. [274 B-E] 
Jn the present case the sum of Rs. 3,89,000 having been paid before 
the conveyance was not liable to duty, [274 G] 
(ii) If mortgage money has been paid off' by the vendee before the 
date of the sale, as part of the consideration, it would be included in 
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the amount leviable with stamp duty under Act 23. 
But in the present 
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case Art. 23 did not apply because neither the sum of Rs. 3,89,000 paid 
by the vendee before the sale nor the sum of Rs. 11,000 paid by the 
vendor after the sale, was shown to be consideration for immovable pro-
perty. [275 D] 
H 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 526 of 
1962. 
Appeal by special leave from the judgment and order, dated 
March 20, 1959 of the Allahabad High Court in Civil Miscel-
laneous Reference No. 213 of 1955. 
~'UPllBMB COURT -llEPOllTS 
(1965] 2 S.C.ll. 
C. B. Agarwala and 0. P. Rana, for the appellant. 
A 
A. V. Viswanatha Sastri and /. P. Goyal, for the respOndent. 
The Judgment of the Court was delivered by 
Sikri, J. 
This is an appeal by special leave against the judg-
ment of the High Court of Allahabad in a reference under s. 57 · B 
of the Indian Stamp Act, 1899. The Board of Revenue referred 
the following questions to the High Court : 
( 1 ) Whether the document is a sale-deed for a consi-
deration. of Rs. 1,00,000 as contended by the 
executants. 
( 2) Whether in view of the provisions of Section 24 of 
the Stamp Act, the sale consideration shall be 
deemed to be Rs. 5,55,000 and duty liable to be 
paid thereon as held by the Board. 
( 3 ) Whether the consideration of the sale will be 
deemed to be Rs. Ten Lakhs, i.e., the entire amount 
due to the mortgagee Bank, and duty is payable 
thereon. 
( 4) On what amount is the additional stamp duty under 
section 107 of the Kanpur Development Act, 1945, 
Jeviable. 
The High Court gave the following answer to the first three 
questions : 
· 
c 
D 
E 
'The document in question is a sale deed for a con-
sideration of Rs. 1,00,000 only and that the Stamp duty 
payable in respect of it was to be calculated on the 
amount and not on any higher amount." 
F 
The appellant, the Board of Revenue, challenges the answer 
given by the High Court to the said three questions. 
We may 
mention that the answer to the fourth question is not the subject-
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