Supreme Court sets aside judgment, orders payment of deficit stamp duty on mortgage deed.

The Supreme Court allowed the appeal, setting aside the High Court's judgment. It held that the respondent was liable to pay the deficit stamp duty of Rs. 50,41,600/- on the mortgage deed, along with interest as directed by the revenue authorities. The Court found that the mortgage deed involved 13 distinct transactions securing loans from different lenders, falling under Section 5 of the Gujarat Stamp Act. The respondent was thus required to pay the additional stamp duty, emphasizing the High Court's error in interpretation. No costs were imposed.

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Issues Involved:
1. Whether the respondent was required to pay the deficit stamp duty of Rs. 50,41,600/- on the mortgage deed.
2. Whether the mortgage deed should be considered as per Schedule 1's Articles 6 and 36 as a simple mortgage.

Issue-wise Detailed Analysis:

Issue 1: Deficit Stamp Duty Payment
The primary issue revolves around whether the respondent was required to pay the deficit stamp duty of Rs. 50,41,600/- on the mortgage deed registered on 6.10.2009. The Full Bench of the Gujarat High Court had previously ruled in favor of the respondent, stating that the respondent was not required to pay the additional stamp duty. The High Court opined that stamp duty is payable on instruments and not on transactions. It concluded that the mortgage deed in question did not fall under Section 5 of the Gujarat Stamp Act, 1958, as it did not involve "distinct matters" or "distinct transactions." The High Court emphasized that the relationship between the borrower and the security trustee (State Bank of India) was independent of the relationship between the borrower and the lending banks. Thus, the instrument did not create separate or distinct matters or transactions.

Issue 2: Classification of Mortgage Deed
The second issue was whether the mortgage deed should be considered as a simple mortgage under Schedule 1's Articles 6 and 36 of the Gujarat Stamp Act. The High Court held that the instrument in question was a mortgage deed and should be charged accordingly. The court found that the State Bank of India, acting as the security trustee, was the only mortgagee under the instrument, and no rights in the mortgaged property had been created in favor of the secured parties or any other persons. Therefore, the mortgage deed did not constitute a combination of multiple mortgages.

Supreme Court's Analysis:
The Supreme Court scrutinized the Security Trustee Agreement and the mortgage deed. It noted that the borrower had entered into separate loan agreements with 13 financial institutions, and the mortgage deed was executed to secure these loans. The Court observed that Section 5 of the Gujarat Stamp Act applies to instruments comprising several distinct matters or transactions. The Court referred to the Constitution Bench judgment in The Member, Board of Revenue v. Arthur Paul Benthall, which clarified that "distinct matters" in Section 5 should be understood in its popular sense, meaning different transactions, even if they fall under the same category.

The Supreme Court concluded that the mortgage deed in question involved 13 distinct transactions, as it secured loans from 13 different lenders. Therefore, the instrument fell under Section 5 of the Act and was chargeable with the aggregate amount of the duties for each transaction.

Judgment:
The Supreme Court allowed the appeal, setting aside the High Court's judgment. It held that the respondent was liable to pay the deficit stamp duty together with interest as directed by the revenue authorities. The Court emphasized that the High Court had committed a serious error of law in interpreting Sections 5 and 6 of the Gujarat Stamp Act. Consequently, the respondent was required to pay the additional stamp duty of Rs. 50,41,600/-. However, the Court did not impose any order as to costs.

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