Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

V. Ramasubramanian, J.
1. Aggrieved by the opinion rendered by the Full Bench of the
High Court of Gujarat in a Stamp Reference under Section 54(1)(a)
of the Gujarat Stamp Act, 1958 (hereinafter referred to as the ‘Act’),
made by the Chief Controlling Revenue Authority of the State of
Gujarat, the Asset Reconstruction Company (India) Ltd., has come
up with the above appeal.
2. We have heard Mr. V. Chitambaresh, learned senior counsel
appearing for the appellant and Ms. Archana Pathak Dave, learned
counsel appearing for the State of Gujarat.
3. The   Oriental   Bank   of   Commerce   (‘OBC’   for   short)   granted
certain facilities to a borrower and the borrower committed default
in repayment. Unable to recover the loan, the Bank assigned the
debt   in   favour   of   the   appellant   herein,   which   is   an   Asset
Reconstruction Company registered with the Reserve Bank of India
under   Section   3   of   The   Securitisation   and   Reconstruction   of
Financial Assets and Enforcement of Security Interest Act, 2002
(hereinafter referred to as ‘Securitisation Act 2002’).  The assignment
made by the OBC was under an Agreement dated 18.11.2008. The
Assignment   Agreement   was   registered   with   the   Sub­Registrar,
Bharuch, on 18.11.2008. In fact, the registration of the document
was preceded by an adjudication under Section 31 of the Act.
4. However, an audit objection was raised by the Office of the
Accountant General on the ground that the deed of assignment
contained a reference to a Power of Attorney  (‘PoA’ for short) in
Schedule 3 and that the said PoA was chargeable to stamp duty
under Article 45(f) of Schedule­I to the Act. A demand for deficit
stamp duty to the tune of Rs.23,53,800/­ was raised pursuant to
the audit objection.
5. Thereafter,   the   Deputy   Collector  (Stamp  Duty)   referred   the
matter to the Chief Controlling Revenue Authority, who in turn
issued a notice to the appellant herein. After considering the reply
submitted by the appellant, the Chief Controlling Revenue Authority
passed   an   order   dated   04.01.2012   setting   aside   the   order   of
adjudication passed on 23.10.2008 and directing recovery of the
deficit stamp duty.
6. Aggrieved   by   the   said   order,   the   appellant   submitted   an
application   under   Section   54(1)(a)   of   the   Act.   On   the   said
application, the Chief Controlling Revenue Authority referred the
following two questions for the opinion of the Court:­
“(A) Whether   the   objection   raised   by   the   Account
General, Ahmedabad in audit para, in the year 2008 is
proper or not, as per Article­45(f) of the Bombay Stamp Act,
1958 or not?
(B) Whether the Asset Reconstruction Company (India)
Limited is liable to pay stamp duty of Rs.24,94,100/­ i.e.
4.9% as per Article­20(a) of the Bombay Stamp Act or not?”
7. For finding an answer to the above questions, the Full Bench
of the High Court examined the recitals contained in the deed of
assignment and found that the Bank had agreed to execute an
irrevocable PoA in favour of the appellant herein, substantially in
the form set out in Schedule 3 of the deed of assignment. The form
set out in Schedule 3 contained recitals empowering the assignee,
as   the   agent   of   the   Bank,   to   sell   any   immovable   property.
Therefore, considering the fact that Article 45(f) of Schedule I to the
Act   makes   a   PoA   given   for   a   consideration   and   containing   an
authority to sell any immovable property chargeable to stamp duty
as a conveyance, the High Court came to the conclusion that the
appellant has to pay stamp duty as fixed by Article 45(f). The High
Court opined that merely because the power to sell, forms part of
the deed of assignment under Schedule 3, the appellant could not
escape   the   charge   of   duty   and   that   the   PoA   is   required   to   be
considered independently. 
8. But we do not think that the above reasoning can be accepted.
First of all, what was presented for registration by the appellant was
a   single   document   namely   an   “Assignment   Agreement”.   Clause
11.12 of the Assignment Agreement contained recitals to the effect
that the seller (assignor, namely the  OBC) had agreed to execute
simultaneously with the execution of the deed of assignment, an
irrevocable PoA, substantially in the form set out in Schedule 3.
What was contained in Schedule 3 to the Assignment Agreement
was the format of an irrevocable PoA.
9. The   High   Court   overlooked   the   fact   that   there   was   no
independent instrument of PoA and that in any case, the power of
sale   of   a   secured   asset   flowed   out   of   the   provisions   of   the
Securitisation Act, 2002 and not out of an independent instrument
of   PoA.   Section   2(zd)   of   the   Securitisation   Act,   2002   defines   a
‘secured creditor’ to mean and include an Asset Reconstruction
Company. The appellant has acquired the financial assets of OBC
in terms of Section 5(1)(b) of the Securitisation Act, 2002. Therefore,
under sub­section (2) of Section 5 of the Securitisation Act, 2002,
the appellant shall be deemed to be the lender and all the rights of
the Bank vested in them. In fact, under Amendment Act 44 of 2016,
sub­section (1A) was inserted in Section 5 of the Securitisation Act,
exempting from stamp duty, any document executed by any bank
under Section 5(1) in favour of an Asset Reconstruction Company
acquiring financial assets for the purposes of asset reconstruction
or   securitization.   Though   the   said   amendment   may   not   be
applicable to the case of the appellant, as the deed of assignment,
in this case, was executed long prior to the amendment, we have
just taken note of the amendment to show how far the Parliament
has gone.
10. Article 45(f) of Schedule I to Act, reads as follows:­
(f) (i)   when   given   for
consideration   and
authorizing   the
attorney   to   sell   any
immovable property
The same duty as is leviable
on a conveyance under Article
20   for   the   amount   of   the
consideration or, as the case
may be, the market value of
the   immovable   property
whichever is greater;
11. For invoking Article 45(f), two conditions have to be satisfied.
They are, (i) the PoA should have been given for a consideration;
and  (ii)  an authorization to sell any immovable property should
flow out of the instrument.
12. In the case on hand, the consideration paid by the appellant to
OBC, was for the purpose of acquisition of the financial assets, in
respect of a particular borrower. The draft of the PoA contained in
Schedule 3 of the deed of assignment was only incidental to the
deed of  assignment.  The deed  of assignment has  already  been
charged to duty under Article 20(a) which deals with “conveyance”.
In   fact   Article   45(f)   also   requires   a   PoA   covered   by   the   said
provision to be chargeable to stamp duty under Article 20.
13. But   what   has   happened   in   this   case   was   that   under   a
Notification   bearing   No.GHM/2002­5­M   STP­102000­2749/H­1
dated 25th January, 2002, the Government ordered the reduction of
stamp duty payable on an instrument of securitization of loans or
assignment of debt with underlying securities, to 75 paise for every
Rs.1000 or part thereof.  This Notification reads as follows:­
“In exercise of the powers conferred by clause (a) of
Section 9  of  the  Bombay  Stamp Act, 1958 (Bom  LX of
1958) and in supersession of Government Orders Revenue
Department   No.   GHM­98­22­M­STP­1096­2527­H­1   dated
26.02.1998,   the   Government   of   Gujarat   hereby   reduces
from the date of publication of this order the duty with
which   an   instrument   of   securitization   of   loans   or
assignment of debt with underlying securities chargeable
under Article 20 (a) of Schedule I to the said Act to 75
paise   for   every   rupees   1000   or   part   thereof   the   loan
securitised or debt assigned with underlying securities.
By   order   and   in   the   name   of   the   Governor   of
14. The   above   Notification   was   amended   by   a   subsequent
Notification   bearing   No. GHM/2003/28/STP/102002/2065/H­1
dated 1st April, 2003.  The said Notification reads as follows:­
“In   exercise   of   powers   conferred   by   clause   (a)   of
section 9 of the Bombay Stamp Act, 1958 (Bom LX of
1958),   the   Government   of   Gujarat   hereby   amends
Government   Order   No.   GHM/2002/5/M/STP/102000/
2749/H­1, dated 25th January, 2002 as follows, namely:­
In   the   said   order,   for   the   words   and   figures   “to
seventy five paise for every rupees 1000 or part thereof”
the words and figures “subject to maximum of rupees one
lakhs, seventy­five paise for every rupees 1000 or part
thereof” shall be substituted.
By   order   and   in   the   name   of   the   Governor   of
15. In view of the Notification dated 01.04.2003 issued in exercise
of the power to reduce, remit or compound the duty, conferred by
Section 9(a) of the Act, the amount of duty chargeable in terms of
Article 20(a) was capped at Rs. 1,00,000/­. In addition to the said
amount   of   Rs.1,00,000/­,   the   appellant   was   asked   to   pay   an
additional duty of Rs.40,000/­ under Section 3­A.  The appellant
has thus paid a total amount of Rs.1,40,000/­ with the instrument
having been charged as a conveyance under Article 20(a).
16. In   all   taxing   Statutes,   there   are   taxing   provisions   and
machinery provisions. Once a single instrument has been charged
under a correct charging provision of the Statute, namely Article
20(a), the Revenue cannot split the instrument into two, because of
the reduction in the stamp duty facilitated by a notification of the
Government issued under Section 9(a).  In other words after having
accepted the deed of assignment as an instrument chargeable to
duty as a conveyance under Article 20(a) and after having collected
the duty payable on the same, it is not open to the respondent to
subject the same instrument to duty once again under Article 45(f),
merely because the appellant had the benefit of the notifications
under Section 9(a). Since the impugned order of the High Court did
not address these issues and went solely on the interpretation of
Article 45(f), the same is unsustainable. Therefore, the appeal is
allowed and the impugned order is set aside. The demand made by
the Chief Controlling Revenue Authority is consequently set aside.
There will be no order as to costs.
(Hemant Gupta)
(V. Ramasubramanian)
New Delhi
    April  26, 2022


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