Stamp duty on film distribution rights: future collections and later deliverables do not create a present mortgage deed.

An instrument granting film distribution rights against advances, with a charge on future collections and a covenant to deliver positive prints after completion of the film, is not a mortgage deed for stamp duty purposes. A mortgage deed under the Indian Stamp Act requires a present transfer or creation of rights over specified property existing at the time of execution; rights relating only to property or proceeds to arise in future do not satisfy that requirement. The arrangement may create contractual rights enforceable later, but it does not constitute a mortgage under Article 40 of Schedule I. The instrument is therefore chargeable only as an agreement, not as a mortgage deed.

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Issues: Whether an instrument granting film distribution rights against advances, with a charge on future collections and a covenant to deliver positive prints after completion of the film, is a mortgage deed chargeable under Article 40 of Schedule I of the Indian Stamp Act, 1899, or only an agreement.

Analysis: A mortgage deed under Section 2(17) of the Indian Stamp Act, 1899 requires a transfer or creation of a right over specified property. The relevant property must exist and be identifiable when the instrument is executed. A covenant concerning property to come into existence later, including anticipated prints and future realisations from exhibition, does not amount to an immediate transfer or creation of rights for stamp purposes. Although such an arrangement may create contractual rights enforceable later, equity does not convert a future covenant into a present mortgage. The instrument therefore lacked the essential elements of a mortgage deed and did not fall within Article 40(a) or 40(b) of Schedule I.

Conclusion: The instrument is not a mortgage deed chargeable as such under the Indian Stamp Act, 1899. It is only an agreement, and the answer is against the Revenue.

Ratio Decidendi: For stamp duty purposes, a mortgage deed requires a present transfer or creation of rights over specified property existing at the time of execution; an instrument dealing only with property or rights to arise in future is not a mortgage deed.

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