CHANDRAKANTARAJ, J. ( 1 ) THIS matter has come before us by way of the reference made by the Chief Controlling revenue Authority in Karnataka under section 54 (1) of the Karnataka Stamp Act, 1957, (hereinafter referred to as the Act) for adjudication as to whether the instrument in question is an 'instrument of trust' as claimed by the author of the trust, viz. , the State Bank of Mysore, a subsidiary of the State Bank of india (hereinafter referred to as the Bank) or it is "deed of mortgage" as claimed by the revenue (State) and if not either what is the instrument on a correct interpretation of its contents and chargeable under which entry in the Schedule to the Act? ( 2 ) WE may at the out set state, if the instrument is but a trust deed, it is chargeable to stamp duty under the Act at rs. 90/- under Article 54 (A) in the Schedule to the Act and at the rate specified in Art. 34 of the Schedule to the Act on the market value of the properties secured (which is rs. 125 lakhs) if it is a deed of mortgage and duty payable will be 10 per cent of the market value of the properties together with such surcharge as may be payable to the local authority as if it is a deed of conveyance. ( 3 ) THE facts leading to the controversy may be stated and they are as follows: by a deed dated 23-3-1982 executed by the Bank styling itself as "debenture trustee" in favour of Unit Trust of India (hereinafter referred to as U. T. I.) concerning certain debentures issued by the New government Electric Factory Ltd. (a company incorporated under the Companies act) (herein- after referred to as N. G. E. F.) of the total value of Rs. 125 lakhs in two series was presented for rsgistration before the Sub- Registrar having jurisdiction who refused to register the same and did not pass any order rejecting registration. Therefore, the Bank, the U. T. I. and the N. G. E. F. presented an appeal to the District Registrar who refused to pass any order on the appeal as there was no written order by the sub-Registrar. Thereupon he was moved under Section 31 of the Act for adjudication of the proper stamp duty payable on the instrument in question. Thereupon he was moved under Section 31 of the Act for adjudication of the proper stamp duty payable on the instrument in question. The District registrar in turn referred the matter to the chief Controlling Revenue Authority in the state under Section 53 (2) of the Act. The chief Controlling Revenue Authority gave a hearing to the parties who were represented by Counsel. The parties contended before him; that the document in question did not transfer, create, modify, abrogate, vary or extinguish any right of any person to any specific immovable property or properties but merely declared a trust, that in considering the nature of the instrument what was relevant was the normal and natural meaning of the words employed in the document together with its construction and intention; and that Art. 54 (A) in the schedule to the Act specifically provided for the duty payable in respect of declaration of trust concerning any property when made by any writing (not being a will) subject to maximum of Rs. 90/- and therefore there should be an adjudication accordingly. But the Chief Controlling Revenue Authority felt many doubts as; that the instrument had only some characteristics of a trust as defined under the Indian Trust Act, and not all; that the trustee (the Bank) itself was being benefitted by charging an annual fee till the liability of the N. G. E. F. was discharged under the debentures to the debenture holder; that there being other benefits provided to the debenture trustee such as reimbursement of out of pocket expenses, not ascertainable, the instrument may fall to be covered by Section 26 of the Act; and that the instrument had the character as the Bank was to hold the debentures as security for acting as trustee for advancing money and further that the document was so drawn up so as to be covered by several entries or articles of the Schedule, and therefore has referred the matter to High Court for adjudication under Section 54 of the Act opining that the instrument is a deed of mortgage. ( 4 ) BEFORE us the Chief Controlling revenue Authority (hereinafter referred to as the Revenue) is the petitioner and the n. G. E. F. , BANK and U. T. I, are the respondents. Arguments for the Revenue have been advanced by the learned High court Government Pleader, Shri V. G. Sabhahit, while Mr. ( 4 ) BEFORE us the Chief Controlling revenue Authority (hereinafter referred to as the Revenue) is the petitioner and the n. G. E. F. , BANK and U. T. I, are the respondents. Arguments for the Revenue have been advanced by the learned High court Government Pleader, Shri V. G. Sabhahit, while Mr. C. B. Srinivasan learned advocate, appearing for the Bank has advanced the main arguments which have been adopted by the other Counsel appearing for the other respondents. ( 5 ) FOR the Revenue it is contended that the instrument in question is one of mortgage or assignment of mortgage as the author of the trust, the Bank admits taking charge of all title deeds and deed of hypothecation relating to immovable properties and plant and machineries of the N. G. E. F. to hold the same for the benefit of U. T. I. , the debenture holder, with power to enforce the security for the benefit of U. T. I. and therefore it should be adjudicated to be a deed of mortgage. In the alternative it is contended, if it is not a deed of mortgage, it should be held to be a 'bond' within the meaning of that expression as defined in Section 2 (l) (a) of the Act having regard to the undertaking given by the bank to pay U. T. I. the money secured by the debentures in the value of Rs. 125 Lakhs. ( 6 ) AS against the above contentions the counsel for respondents have asserted that the instrument is no more than a declaration of trust together with the obligations of the trustee clearly spelt out and what is narrated in the preamble to the document should be ignored in determining the true intent of the author of the trust as at best what the preamble states is no more than something which indicates the creation of mortgage by deposit of title deeds and hypothecation of plant and machinery and therefore cannot be construed as if the instrument created the mortgage by deposit of title deeds of immovable properties or the hypothecation of the plant and machineries. ( 7 ) THE undisputed facts are; (1) The N. G. E. F. issued the debentures privately placed to U. T. I. on terms and conditions agreed to between them and contained in the deed of agreement dated 23-3-1982; (see paras 6 and 7 of the instrument under reference) (2) That on 23-3-82 mortgage by deposit of title deeds was created by N. G. E. F. in respect of the immovable properties owned by it in favour of ten financial institutions which included the Bank, the author of the trust (see para 11 of the instrument under reference), and (3) That on 23-3-82, N. G. E. F. also executed a deed of hypothecation for consideration namely, to secure the repayment and redemption of the debentures in question of all its moveables including plant and machineries fixed, (see para 12 of the instrument under reference) in favour of the Bank which is also the debenture trustee. ( 8 ) ALL the above documents and the one under reference were all created on the same day presumably after the debentures had been issued and paid for. ( 9 ) IN order to appreciate the arguments advanced to further the contentions it is necessary to understand the meaning of the terms debenture, debenture trust and debenture trustee. ( 10 ) DEBENTURE is defined as follows in the companies Act, 1956:"2 (12) "debenture" includes debenture stock, bonds and any other securities of a company, whether constituting a charge on the assets of the company or not;" from the above it is obvious that the meaning is still obscure. In Palmer's company Law, Vol. 1, 23rd Edition the following passage is found:"in modern commercial usage a debenture denotes an instrument issued by the company, normally but not necessarily called on the face of it a debenture and providing for the payment of, or acknowledging the indebtedness in, a specified sum- say, 100- at a fixed date, with interest thereon. It usually - but not necessarily- gives a charge by way of security, and is oftenthough not invariably-expressed to be one of a series of like debentures. But the term, as used in modern commercial parlance, is of extremely elastic character", it has a historical background with which we may not now concern ourselves. It usually - but not necessarily- gives a charge by way of security, and is oftenthough not invariably-expressed to be one of a series of like debentures. But the term, as used in modern commercial parlance, is of extremely elastic character", it has a historical background with which we may not now concern ourselves. The meaning of the term implies on the facts of this case that the N. G. E. F. is the debtor and the U. T. I. is the creditor and therefore the debenture holder. ( 11 ) THE next questions we should ask ourselves is what is a debenture trust? and who is a debenture trustee? ( 12 ) SECTION 118 of the Companies Act, 1956 provides that any trust deed for securing any issue of debentures shall be forwarded to the holder of such debentures or any member of the company at his request within seven days of the making of the trust deed on payment of fee specified in that section itself. It further provides the consequences of refusal to furnish copies of the trust deed and the court's power to direct such furnishing. Apart from the above the trust deed is required to be available for inspection of any member or debenture holder on payment of fee. Similarly Section 119 of the Companies Act provides for the liability of the trustees for debenture holders with certain consequences and exceptions. ( 13 ) IT is stated in Pennington's Company law, 5th Edition, that trusts of registered debentures are created in the same way as trusts of shares (see page 516 ). The learned author has stated that trusts of shares registered in the Company's register of members are created by transferring the shares to trustees upon trusts declared by the setlor in a separate document or upon trusts declared by the trustees themselves after the transfer has taken place (see page 438 ). ( 14 ) IN Palmer's Company Law (Vol. 1, 23rd Edition) we notice under the heading trust deeds the following:"debentures and debenture stock are often secured by a trust or covering deed, conveying property of the company to trustees in favour of the debenture holders, charging other property and containing a number of ancillary provisions regulating the respective rights of the company and the debenture holders. 1, 23rd Edition) we notice under the heading trust deeds the following:"debentures and debenture stock are often secured by a trust or covering deed, conveying property of the company to trustees in favour of the debenture holders, charging other property and containing a number of ancillary provisions regulating the respective rights of the company and the debenture holders. Whether there should be a trust deed or not must depend on the circumstances; where the debentures are issued only for a temporary purpose, e. g. to bankers as security for an overdraft or to other persons for a short term, or are to be taken up by the directors, a deed may be dispensed with; but where the transaction is of some magnitude, in particular where large-scale borrowing by companies from the public is in question, a trust deed is commonly used. Advantages of trust deed the advantages of a trust deed may be briefly summarised as follows: 1. It constitutes trustees charged with the duty of looking after the rights and interests of the debenture holders. Thus they may vote as they consider best in respect of any shares which may be vested in them as trustees. 2. The debenture holders can by these trustees enter and sell the property comprised in the security. 3. A legal estate is sometimes vested in the trustees with the protection which is conferred thereby. " ( 15 ) FROM the above, it is clear that the practice in India as well as well as in England appears to be to ensure repayment of debt to the debenture holder by an instrument of trust by which the trustee ensures repayment of the interest as well as the principal advanced against the debentures to the holder of the debentures. ( 16 ) WHAT emerges from what has been stated above is that the debenture trust has to be created expressly by an instrument of trust; author of such trust transfers the properties moveable or immovable to the trust and the trustee or the trustees hold such properties in trust for the benefit of the beneficiary viz. , the debenture holder to be used in the event of default of payment of interest or principal amount of debt advanced as per terms agreed by selling such properties in the hands of trustee or trustees. , the debenture holder to be used in the event of default of payment of interest or principal amount of debt advanced as per terms agreed by selling such properties in the hands of trustee or trustees. In this context it is useful to refer to another passage in Palmer's Company Law and it is as follows:"a trust deed usually contains a legal mortgage of the freehold and leasehold properties, e. g. in the case of a brewery, the brewery and tied houses, and a general charge by way of floating security on the rest of the assets and undertaking. Under the Law of Property Act 1925, s. 87, the legal mortgage takes the form of a demise to the trustees for a term of years or a charge by way of legal mortgage. Following on the charge comes a clause specifying the various events on the happening of which the security is to become enforceable. These usually are: 1. default in payment of principal or interest; 2. winding up; 3. breach of covenant; or 4. appointment of a receiver. Other events are sometimes added. The trust deed then provides that, when the security becomes enforceable, the trustees may at their discretion and shall, at the request of a specified proportion of the debenture or debenture stockholders, sell the mortgaged premises, and apply the net proceeds in paying off the debentures or debenture stock and hand the balance to the company. "we see from the above the form and contents generally in vogue in England. But here in India we have to assume the form and contents are similar to the document under reference. ( 17 ) THEREFORE, it is now useful for us to set out the form and contents of the document under reference and then proceed to construe it with reference to the provisions of the Companies Act, 1956, Indian Trusts Act, 1882 and the Act. ( 18 ) THE Bank is the sole author of the trust; it describes itself as the debenture trustees. It refers to the trust being in favour of and for the benefit of holders for the time being of the mortgage debentures in two series totalling in value in the sum of Rs. ( 18 ) THE Bank is the sole author of the trust; it describes itself as the debenture trustees. It refers to the trust being in favour of and for the benefit of holders for the time being of the mortgage debentures in two series totalling in value in the sum of Rs. 125 lakhs by private placement with the U. T. I, issued by the N. G. E. F. ( 19 ) IN the preamble portion (paras 1 to 12) the instrument makes reference to the encumbrances of N. G. E. F. by way of mortgages and deed of hypothecation in favour of certain financial institutions including the debenture trustees. It also refers to an agreement between U. T. I. and n. G. E. F. and the earlier correspondence between them regarding the issue and subscription of the debentures. ( 20 ) IN para 13 it is stated that pursuant to the request of N. G. E. F. the declaration of trust is being made and registered. We feel that the declaration in form is the crucial clause and have therefore set out that portion of the instrument or recitals therein, in extenso: "now THESE PRESENTS witness AND IT IS HEREBY DECLARED BY THE Debenture Trustees for the benefit of the UTI in respect of the said Debentures as follows:- 1. The Debenture Trustees hereby declares that the Debenture Trustees shall hold the securities created in their favour by the Company under the Joint mortgage by Deposit of Title deeds in respect of the land and other immoveable properties more particularly described in the FIRST schedule hereunder written and under the said hypothecation of moveable machinery and other assets as herein before recited upon trust and with the subject to the powers and provisions hereinafter declare and contained of and concerning the same, that is to say, in trust for the benefit of U. T. I. in respect of the said debentures being 7,500 Series 'a' and 5,000 Series 'b' - 11% Mortgage debentures of Rs. 1,000/- each for the time being issued and outstanding and entered in the Register of Debenture holders maintained by the Company ranking inter-se pari passu without any preference or priority of one over the other or others and so that the debenture Trustees shall hold upon trust the moneys which shall arise or may be obtained by enforcement of the said securities or any part thereof or from any sale, collection conversion or receipt by the Debenture Trustees of the proceeds thereof if the said securities have become enforceable and shall in the first place pay and reimburse to themselves and to retain and discharge all the costs, charges and expenses incurred in or about the enforcement, sale, collection or conversion or exercise of the powers, of the trust of the Debenture Trustees and shall apply the residue of the said moneys, subject to the prior charge of the Company's stocks of raw-materials, semi finished and finished products, consumable stores and stores and spares not relating to the plant and machinery on the security of which the Company has obtained various banking facilities for working capital requirements and subject to the pari passu rights of ICI CI, IDBI, ifci, LIC, GIC, OFGI, NIC, NIA, UI under or by virtue of the mortgages, charges and securities already created or to be created as also under or by virtue of the provisions of the Interse agreement to be hereafter executed as provided herein: - first: in or towards payment of the said debentures of all arrears of interest including time overdue interest (which shall be deemed to accrue from day to day) remaining unpaid on the mortgage Debentures held by them respectively; secondly: in or towards payment of all principal moneys owing on the said debentures whether the said principal moneys shall not then due any payable and thirdly: The surplus (if any) of such moneys in payment to the person or persons entitled thereto. Provided that if the Debenture Trustees are of the opinion that it is expedient so to do payment may be made on account of principal before the whole or part of the interest due on the said debentures has been paid but such alternative in the order of payment of principal and interest herein prescribed shall not prejudice the right of the UTI to receive the full amount to which they have been entitled if the ordinary order of payment has been observed or any less amount which ultimately being realised from the security may be sufficient to pay. " the declaration is followed by conditions subject to which the trustees will discharge their duties and obligations and leave the n. G. E. F. to manage its affairs. There are certain rights reserved in favour of the trustees such as appointment of receivers or agents etc. with which we may not concern ourselves. ( 21 ) THE main contention advanced for the Revenue is that the instrument under reference creates mortgage by deposit of title deeds in favour of the Bank. We should reject that contention without any hesitation. Firstly, the executant of the document is not the N. G. E. F. which is the owner of the immovable properties mentioned in the schedules. Secondly, no transfer of interest in the immovable and moveable properties including the plant and machineries of n. G. E. F. is made in favour of U. T. I. under the instrument in question. ( 22 ) EQUITABLE mortgage by deposit of title deeds may be created by mere act of depositing deeds of title or even evidence of title like tax receipts evidencing payment of property tax on immovable properties. It is not necessary to reduce to writing the transfer of interest in the immoveable property by way of security as in the case of other forms of mortgage. If reduced to writing the creation of equitable mortgage would also attract the same rigour as other mortgages, the stamp duty payment and compulsory registration under the Registration Act. ( 23 ) MERELY because there is recital about the creation on the same day, viz. , 23-3-82, of a joint mortgage by deposit of title deeds along with other documents in favour of certain institutions including the Bank (para 11 of the instrument under reference) the instrument under reference cannot be construed a deed of mortgage. ( 23 ) MERELY because there is recital about the creation on the same day, viz. , 23-3-82, of a joint mortgage by deposit of title deeds along with other documents in favour of certain institutions including the Bank (para 11 of the instrument under reference) the instrument under reference cannot be construed a deed of mortgage. ( 24 ) THIS Court in the case of murugharajendra Co. , y Chief Controlling ravenue Authority and others (1974 (1) karnataka Law Journal, 177) has explained when exactly an instrument of equitable mortgage if at all is liable to be charged to stamp duty under the Act. After adverting to the definition of the term "instrument" in section 2 (J) of the Act and the decision of the Supreme Court in the case of UNITED bank OF INDIA LTD v M/s LEKHA RAM sonaram and CO. (A. I. R. 1965 S. C. 1591) the Full Bench of this Court ruled as follows:"it is clear from the opinion of the supreme Court extracted above that a mortgage by deposit of title deeds can be created by handling over the title deeds by the borrower to the lender with the intention that these documents shall constitute the security for the debt. But if the parties choose to reduce the contract to writing, that document alone would be the sole evidence of its terms. In the latter case, the document shall have to be treated as an instrument creating a right in favour of the mortgagee to recover the loan from the properties to which the title deeds relate. Such an instrument requires to be registered under Section 17 of the registration Act, as a non-testamentary instrument creating an interest of the value of Rs. 100/- and upwards in immovable property. It would also become liable for stamp duty under Art. 6 of the Schedule to the Act. Hence, the essential factor which determines whether a document is one by which an equitable mortgage is created is the intention of the parties. The existence or otherwise of such intention can be established either by the documents produced by the parties or by oral evidence or by both. " ( 25 ) FROM the above it is obvious that the instrument which we are required to adjudicate is not executed by the owner of the immovable properties, viz. The existence or otherwise of such intention can be established either by the documents produced by the parties or by oral evidence or by both. " ( 25 ) FROM the above it is obvious that the instrument which we are required to adjudicate is not executed by the owner of the immovable properties, viz. , the N. G. E. F. A mere reference to creation of joint mortgage of properties in favour of the Bank and other institutions referred to in para 11 of the instrument is not evidence of N. G. E. F. depositing the title deeds. It is the Bank, the executant of the instrument which has stated a fact and no more. ( 26 ) THEREFORE, we should not hesitate to hold that the instrument is not a deed of mortgage, for the simple reason there is no mortgagor who can be said to have deposited the title deeds relating to any immovable property as owner thereof with any one else as security for loans advanced. On the other hand what is obvious by the reference in para 11 and the contents of the declaration extracted earlier is that the Bank is holding the title deeds for and on behalf itself and the other financial institutions and the title deeds relate to immovable properties owned by N. G. E. F. and obviously deposited by n. G. E. F. with the Bank. ( 27 ) IN the view we have taken having regard to the enunciation of the law by the supreme Court and our own High Court, reliance placed on the decision of the madras High Court in the case of THE secretary TO THE COMMISSIONER of SALT, ABKARI AND SEPARATE revenue, REVENUE BOARD, madras v (1915) 38 I. L. R. MADRAS, 646) by the Revenue is not on a correct understanding of the law and certainly without reference to the facts of the case we have on hand. In the Madras case, mrs. ORR executed the document in question which provided for the Bank of madras advancing moneys to her to carry on her deceased husband's business against the plant and machinery belonging to the business which was entrusted to the Bank as trustee with power to use, sell or employ, exchange or otherwise deal with the trust property etc. ORR executed the document in question which provided for the Bank of madras advancing moneys to her to carry on her deceased husband's business against the plant and machinery belonging to the business which was entrusted to the Bank as trustee with power to use, sell or employ, exchange or otherwise deal with the trust property etc. In that circumstance, it was held by the Madras High Court, that having regard to the true intention of the parties, namely, the executant and the executee of the document which was to give control of the properties of the business to the Bank as trustee together with certain rights by way of security and therefore the document was a deed of mortgage liable to be stamped as such. On the facts of that case we could not have come to a different conclusion either. ( 28 ) THIS takes us to the next question that is, whether the instrument under reference is a bond executed in favour of UTI by the bank. The term "bond" is defined in Section 2 (1) (a) of the Act as follows:"2. Definitions.- (l) In this Act, unless the context otherwise requires,- (a) "bond" includes- (i) any instrument whereby a person obliges himself to pay money to another, on condition that the obligation shall be void if a specified act is performed or is not performed, as the case may be; (ii) any instrument attested by a witness and not payable to order or bearer, whereby a person obliges himself to pay money to another; and (iii) any instrument so attested, whereby a person obliges himself to deliver grain or other agricultural produce to another;" ( 29 ) THE learned Government Pleader, shri V. G. Sabhahit has contended that the instrument under reference clearly falls within the ambit of sub-clause (ii) of clause (a) of sub-section (l)of Section 2 of the Act as the document read as a whole is no more than an obligation on the part of the Bank to pay money to U. T. I. and the document is attested and not payable to bearer or order and therefore, the instrument is liable to be stamped as a 'bond' falling under Article 12 of the Schedule to the Act. ( 30 ) THE argument is attractive. ( 30 ) THE argument is attractive. But on a close scrutiny of the language employed in the declaration extracted earlier or the conditions that follow the declaration we find that there is no obligation to pay its funds or out of its funds any thing to U. T. I. towards the unpaid interest or the principal of the debentures in question. The Bank has undertaken to apply the money realised from the enforcement of securities it holds only if and when the securities become enforceable and not otherwise. What it has undertaken to do as trustee or debenture trustee is not payment of money belonging to the N. G. E. F. held by it as such trustee when the contingency arises. It has no obligation to pay out of its own funds and therefore falls outside the ambit of the definition 'bond'. In other words, if securities bring forth nothing then there is no obligation to pay. If N. G. E. F. has paid off the debenture holder, the Bank or the debenture trustee has no obligation to pay money. It is true, that definition of the term 'bond' is not exhaustive as held by some high Courts over the years See 6 Lahore 226 = 1925 Lah. 415 ). It is also well settled that in deciding the question whether an instrument does or does not fall within the purview of bond as defined by Section 2 (1) (a) of the Act, the instrument should be considered as a whole and it is not permissible to divide it into several parts and look at it piece-meal and then to assign each one of such parts to some other articles in the schedule to the Act (See A. I. R. 1941 All. 243 f. B. ). To be a 'bond' the executor of the instrument must expressly undertake to pay money as an obligation arising out of the instrument. It shall not be a matter to be inferred. ( 31 ) IN these circumstances, we are of the view that the instrument under reference, read as a whole does not answer to the definition of 'bond' in the Act. We have relied mainly on the language employed in the declaration to which we will make a more detailed reference later in the course of this opinion. ( 31 ) IN these circumstances, we are of the view that the instrument under reference, read as a whole does not answer to the definition of 'bond' in the Act. We have relied mainly on the language employed in the declaration to which we will make a more detailed reference later in the course of this opinion. ( 32 ) THIS takes us to the contention of the respondents before us that the document in question is a trust simply cites notwithstanding the long preamble and its contents as well as the several provisions made in the instrument regarding the rights and obligations of the trustee - debenture trustee. However, learned Government Pleader pointed out that there is no trust property or properties held by the Bank as debenture trustee as the mortgaged properties (immovable) and the hypothecated plant and machineries continue to be in the possession and control of the N. G. E. F. and with no property vesting in the trustee to hold, control and apply to the benefit of the beneficiary the instrument cannot be considered to be a deed of trust or instrument of trust. ( 33 ) THE fallacy in the contention or argument of the learned Government pleader is in not noticing the language of the declaration in the instrument. Bank, the debenture trustee has never claimed to be in possession of any trust properties, moveable or immovable. It only claims that it holds securities in respect of such properties having stated that the immovable properties are mortgaged jointly by deposit of title deeds in favour of the Bank and the nine other financial institutions as well as the deed of hypothecation by which the plant and machinery is hypothecated to the Bank. In other words the force or thrust of the argument is that possession, actual and physical, of the properties of the N. G. E. F. is not necessary but securities as above themselves constitute the trust property or properties which is required to be applied, used or enforced for the benefit of the U. T. I. and therefore it is a trust within the meaning of that term as defined in the Indian Trusts act. ( 34 ) DEFINITION of trust is to be found in section 3 of the said act and it is as follows:"3. ( 34 ) DEFINITION of trust is to be found in section 3 of the said act and it is as follows:"3. A "trust" is an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner:" ( 35 ) IN order to satisfy the requirements of the above definition there should be three things; (1) a person whose duty it is to carry out the trust, (2) property which is vested at law in the trustee and which he is bound to deal with in accordance with the provisions of the trust, (3) a person who is entitled to enforce the provisions of the trust. ( 36 ) THE contention as noticed earlier is that the Bank is the author of the trust as well as the trustee and it holds the securities, the mortgage as well as the deed of hypothecation of plants and machineries that are the subject of the trust and U. T. I. is the one to enforce the provisions of the trust if the benefit is not given to it. ( 37 ) THAT the Bank is the author of the trust cannot be disputed as it is the executant debenture trustee that has made the declaration as evidenced by the instrument itself. ( 38 ) ARE the securities, the mortgage by deposit of title deeds and the deed of hypothecation both of which do not give possession of the properties to the Bank capable of being held as properties? The answer seems to be in the affirmative. ( 39 ) MORTGAGE of any kind under the transfer of Property Act is an acquisition of interest in immovable property capable of being transferred in like manner to others and therefore the mortgage acquired by the bank jointly constitutes its property and that of the other mortgagees who apparently have agreed that the Bank shall hold the title deeds in its possession and as the Bank ranks pari passu with the other institutions it is capable of realising its securities in its own right. This is obvious to the reader of the instrument in question. This is obvious to the reader of the instrument in question. ( 40 ) SIMILARLY, by deed of hypothecation the N. G. E. F. has pledged its machinery and plant with the Bank while retaining possession of the same. But then at law the owner is in possession is only as bailee as the pledger and pledgee is the real owner. This becomes clear having regard to Section 172 of the Contract Act. A passage from Paget on the Law of Banking (Eighth Edition at page 566) which is as follows:"this difficulty in the way of the owner's being in a position to pledge goods in his own possession has been circumvented by the institution of letters of lien or letters of hypothecation. The distinction seems a narrow one, but it is clear that an owner, though he cannot himself pledge, may, by agreement, change his possession into that of bailee for the pledgee, and that the instrument constituting him such is 'one used in the ordinary course of business as proof of the possession or control of goods' within the exception to the Bills of Sale Act, and takes the goods out of his 'order and disposition. "from the above it is clear that the Bank is in a position to treat the securities in its possession as properties of the trust it has authored. ( 41 ) THIS becomes clearer when one looks at the origin of debenture trustee historically. A passage from Pennington's Company Law (5th Edition) at page 475 is useful in this context and it is quoted below: "by the end of the last century public companies found that their issues of debentures were being subscribed for by so great a number of investors that it was inconvenient to employ the form of debenture currently in use. If the company mortgaged its assets to a thousand persons, it had td get a thousand consents when it wished to sell an asset which was specifically mortgaged, or to depart in the smallest degree from the terms of its debentures. The problem was solved by the introduction of the trust deed by which trustees were appointed to represent the interests of the debenture holders. The problem was solved by the introduction of the trust deed by which trustees were appointed to represent the interests of the debenture holders. The trustees were given a legal mortgage of the company's fixed assets and a floating charge over its other property, were empowered to consent on the debenture holders' behalf to minor departures by the company from the terms of the debentures, and were authorised to call meetings of debenture holders to decide whether the trustees should enforce the security given by the trust deed when a case arose for doing so, or whether the debenture holders should agree to a modification of their rights when the company was unable to meet its obligations in full. " ( 42 ) IN the instant case, there is only one debenture holder viz. , U. T. I. That should not make any difference to the practice of creating debenture trustees. ( 43 ) WE have essentially relied on the language of the declaration contained in the instrument, particularly the following passages; ". . . . . . . . Debenture Trustees shall hold the securities created in their favour. . . . . . . . . . . . . . shall hold upon trust the moneys which shall arise. . . . . . . . . . by enforcement of the said securities. . . . . . . . . . . . . . . . . . . . . . if the said securities have become enforceable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . shall apply the residue of the said moneys. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . as provided herein:- first: in or towards payment of the said debentures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . etc. . . . . . . . . . . . . . . as provided herein:- first: in or towards payment of the said debentures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . etc. That the Bank is to charge a fee for its services as a trustee annually is neither breach of trust nor opposed to any provision of the Indian Trusts Act. It is but legitimate that the trustee has to defray expenses incurred by it or him or her or them while discharging its, his or her or their obligations under the provisions of the Trust. In hodgson v Aceles, (1902) W. R. 57 it has been held that the trustees have commonly given remuneration by the deed, but, unless otherwise provided that ranked after the debenture or debenture stock-holders. Therefore, the argument that trustee has himself benefitted has no force to construe the document or instrument for what it is, an instrument of trust. ( 44 ) IN the result, our adjudication is that the instrument under reference is liable to be charged stamp duty under Article 54a, of the Schedule to the Act. ( 45 ) WE have made a liberal approach in adopting the well known rule of construction the rule of beneficial construction. Debenture is a means of raising funds by any one but generally by companies in the interest of trade commerce and industry. Trusts equally play an important role in the same field as well as in other fields. It is best expressed by quoting from Keeton on Trusts:"the Trust is one of the most important, and flexible, institutions of modern English Law, being rivalled in this respect only by the modern limited, liability Company. To some extent, moreover, the functions of these two great institutions may overlap. Many associations and organisations (including schools outside the state system) exist under trust deeds, but their objects could be carried out as effectively if some of the more active members of the Governing body were incorporated under the companies' acts, and indeed, this sometimes occurs. " --- *** --- .