GOPALAN v. CHELLAPPAN — 1988 DIGILAW 317 (KER)

Judgment :- 1. The order disposing of the C. R. P. was delivered on 4th July, 1988. There after on the representation of the counsel representing the parties, who brought to my notice two Full Bench rulings, one of the Andhra Pradesh High Court, Hazrami Gangaram v. Kamlabai (A.I.R.1968 A.P. 213 (FB) ) and the other of the Madras High Court, Chief Cont, Rev. Authority v. Canara I. & B. Syndicate (A. I. R.1969 Mad. 1(FB) both distinguishing the earlier Full Bench ruling of the Madras High Court in C. E. Co. v. C. C. Rev. Authority (A.I.R.1953 Mad. 764 (FB)), cited in the order dated 4th July, the revision was posted again for "to be spoken to" and the revision was thereupon heard again and disposed of by the following order modifying the order delivered on 4th July, 1988. 2. The plaintiff in a suit for recovery of money is the revision petitioner. 3. The suit is based on an agreement executed on a stamp paper worth Rs.3/-. According to the defendant the agreement in fact is a 'mortgage deed'. Since it was not registered, the respondent contended that it was not admissible in evidence. 4. The learned Munsiff after considering the various aspects of the case held that the document is a 'mortgage deed' within the meaning of S.2(n) of the Stamp Act and, inasmuch as the same is insufficiently stamped, the petitioner-plaintiff is liable to pay the deficit stamp duty and penalty. It is this order that is under challenge. 5. The short but interesting question that arises for consideration is, "whether the document in question, which has been found to be a mortgage deed is not admissible in evidence since it is not properly stamped?". The answer to the question depends upon the construction of S.3,33,34, and 2 (n) of the Stamp Act, S.58 and 59 of the Transfer of Property Act and S.47 and 49 of the Registration Act. 6. The court under S.33 of the Stamp Act can take action and impound the instrument if it finds in the performance of its functions, that the instrument, chargeable, in its opinion, with duty has not been duly stamped. It should therefore be found that the instrument is one chargeable with duty but nonetheless, not duly stamped, before the same was impounded by the officer before whom the party had produced it voluntarily. It should therefore be found that the instrument is one chargeable with duty but nonetheless, not duly stamped, before the same was impounded by the officer before whom the party had produced it voluntarily. It may in this connection be necessary to understand the definitions of the words 'chargeable' and 'instrument'. The word 'chargeable' is defined in S.2(b) of the Stamp Act. It reads: "(b) "chargeable" means, as applied to an instrument executed or first executed after the commencement of this Act, chargeable under this Act, and, as applied to any other instrument, chargeable under the law in force in the territories of the State of Kerala when such instrument was executed, or, where several persons executed the instrument at different times, first executed;". The expression 'chargeable' means chargeable under S.3 of the Stamp Act. Chargeability no doubt, depends on the contents of the deed and not on the label given to it. 'Instrument' is defined thus: "0) "instrument" includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded...". The definition is an inclusive one. What is meant by this? It should in this connection be remembered that going by the well established principles, the term "include" in an interpretation clause is used with the intention of widening its scope by specific enumeration of certain matters, which the ordinary meaning may or may not comprise, so as to make the definition enumerative but not exhaustive, while retaining its ordinary meaning. This word therefore must be construed as comprehending not only such thing they signify according to their natural import but also those things which the interpretation clause declares that it shall include. It therefore follows that a document by which any right or liability is, or purports to be created, transferred, limited, etc. is also chargeable under S.3 of the Stamp Act. That means such an instrument must be a document by which any right or liability is, or purports to be, created, transferred etc. The charging Section. It therefore follows that a document by which any right or liability is, or purports to be created, transferred, limited, etc. is also chargeable under S.3 of the Stamp Act. That means such an instrument must be a document by which any right or liability is, or purports to be, created, transferred etc. The charging Section. S.3 provides that subject to the provisions of the Act and the exemptions contained in the Schedule, every instrument mentioned in the schedules which, not having been previously executed by any person, is executed in the territories of the State of Kerala on or after the commencement of the Stamp Act and every instrument mentioned in the Schedule which not having been previously executed by any person, is executed out of the State of Kerala on or after that day, relates to any property situate, or to any matter or thing done or to be done, in the territories of the State of Kerala and is received in the territories of the State of Kerala, is chargeable to duty. We are not concerned with the proviso to the Section as also subsection 2 here and therefore they are not dealt with in this order. It is thus clear that every instrument, mentioned in the schedule and which satisfies the requirements stipulated in S.2 0) defining 'instrument' is chargeable to stamp duty. The schedule gives the description of the instrument as also the proper stamp duty that should be paid thereon. One such instrument is 'mortgage deed'. Going by the definition of the expression 'mortgage deed' under S.2(n) of the Stamp Act, not only mortgage deeds as understood in law but also instruments where for the purpose of securing money advanced, or to be advanced, by way of loan, or an existing or future debt, or the performance of an engagement, one person transfers, or creates to, or in favour of, another,a right over or in respect of specified property, are liable to stamp duty. 7. But here, going by the findings of the court below, the instrument in question evidences only a simple mortgage, hence a 'mortgage deed' and therefore it is unnecessary to go into the ramifications of the definition of 'mortgage deed' under S.2(n). However, the instrument is insufficiently stamped has been found by the court below. Not only that, it is not registered though it is attested by two witnesses. However, the instrument is insufficiently stamped has been found by the court below. Not only that, it is not registered though it is attested by two witnesses. The question that would immediately arise is this: "whether the court below was justified in impounding the instrument in exercise of the powers vested in it under S.33 and also levying penalty under proviso 'a' to S.34 of The Stamp Act?". 8. It is not disputed that the document though compulsorily registerable, has not been registered. It may in this connection be noted that no valid mortgage other than a mortgage by deposit of title deed, where the principal money secured is Rs. 100/- or upwards can be created by an unregistered document. A reference in this connection to S.59 of the Transfer of Property Act is profitable. This Section provides that such a document can be effected only by registered instrument signed by the mortgagor and attested by at least two witnesses. One of the attributes of a valid mortgage is transfer of an interest in immovable property in fact and not a purported transfer. Again to call such an instrument a valid mortgage it should not only be executed and attested but it should also be registered. To put it differently it is not enough if the document purports to effect a transfer. It must transfer. I am fortified in this view by a Full Bench ruling of the Madras High Court in A. I. R.1953 Mad.764 and a decision of the Madhya Pradesh High Court in A.I.R.1973 M. P. 172. 9. The instrument in question, since it is not registered, cannot be treated as a mortgage deed and therefore the same is not chargeable with stamp duty as an item falling under Art.37 of The Stamp Act. In order to impound a document the requirements that should be satisfied are those stipulated under S.33 of the Act. This Section says that if the authority before whom the instrument is produced is of opinion that it is chargeable with duty, but is insufficiently stamped, then the said authority can impound the same. In order to impound a document the requirements that should be satisfied are those stipulated under S.33 of the Act. This Section says that if the authority before whom the instrument is produced is of opinion that it is chargeable with duty, but is insufficiently stamped, then the said authority can impound the same. The instrument here, though a document creating a simple mortgage within the meaning of S.58 of the Transfer of Property Act, does not in fact, effect a transfer of interest in immovable property since it is not registered and hence not chargeable to Stamp Duty, and if that be so, the question whether it is insufficiently stamped and therefore liable to be impounded does not arise. 10. The learned counsel for the respondent nonetheless argues that there is no need to have a transfer of interest in immovable property in order to call an instrument a mortgage deed. It is enough if there is a purported transfer of interest in immovable property, as noticed in the definition of 'instrument'. In support of this argument he cited two Full Bench rulings, one that of the Madras High Court in A. I. R.1969 Mad.1(FB) and the other of the Andhra Pradesh High Court in A.I.R. 1968 A.P. 213(FB). The Full Bench ruling of the Madras High Court in A. I. R.1953 Mad. 764 (FB) has been distinguished and explained in the later Full Bench ruling of the same High Court. (A. I. R.1969 Mad.1(FB)), as also in the Full Bench ruling of the Andhra Pradesh High Court, (A.I.R. 1968 A.P. 213 (FB)). 11. Before I deal with the above argument I shall consider the object with which The Stamp Act is enacted. As observed by the Supreme Court "The Stamp Act is a fiscal measure enacted to secure revenue for the State on certain classes of instruments". (See, H.C. Ltd. v. Dilip Construction, A.I.R. 1969 S.C.1236). The instruments which are liable to be charged under S.3 with duty are enumerated in the Schedule. One such instrument is the document evidencing a mortgage other than a mortgage by deposit of title deeds within the meaning of S.58 of The Transfer of Property Act. 'Mortgage deed' as such is not defined although there is an inclusive definition of the term under S.2 (n) of The Stamp Act. One such instrument is the document evidencing a mortgage other than a mortgage by deposit of title deeds within the meaning of S.58 of The Transfer of Property Act. 'Mortgage deed' as such is not defined although there is an inclusive definition of the term under S.2 (n) of The Stamp Act. Going by the cannons of interpretation of an inclusive definition, the meaning of the word "mortgage deed" must be the ordinary meaning understood in law. If that be so, the instrument, if it is a "mortgage deed" should be one which satisfies the requirements stipulated under S.59 of the Transfer of Property Act. When the money secured is one hundred rupees or upwards, a mortgage, other than a mortgage by deposit of title deeds, can be effected only by a registered instrument signed by the mortgagor and attested atleast by two witnesses. The effect of non-registration is that the instrument will not affect "any immovable property comprised therein". (See S.49 Registration Act). When once it is registered, the mortgage deed becomes operative from the date of execution (See S.47 Registration Act). Even the document which is compulsorily registerable requires to be stamped before or at the time of execution provided it is chargeable under S.3 of The Stamp Act. That does not mean that the instrument becomes a mortgage deed coming under Art.37 of The Schedule mentioned in S.3 of The Stamp Act immediately on the mortgagor executing the same ie. signing the instrument or putting his signature thereon within the meaning of the word 'executed' defined under The Stamp Act. It should in this connection be remembered that what is charged under S.3 is 'the instrument' mentioned in the Schedule and executed in the territories of the State of Kerala on or after the commencement of The Stamp Act. It is such an instrument which on being produced is found by the authority concerned, is insufficiently stamped or not stamped at all, which can be impounded under S.33. And it is only in such cases penalty under S.34 can be levied. 12. The Full Bench rulings relied on by the counsel for the respondent do not appear to have had occasion to consider these aspects of the matters. These aspects in judgment, highlight the scheme of this fiscal enactment. And it is only in such cases penalty under S.34 can be levied. 12. The Full Bench rulings relied on by the counsel for the respondent do not appear to have had occasion to consider these aspects of the matters. These aspects in judgment, highlight the scheme of this fiscal enactment. The Stamp Act being a fiscal measure enacted to secure revenue must be interpreted strictly and if two meanings are equally possible, the meaning in favour of the subject must be given effect to. (See The Board v. Sidhnath, A. I. R.1965 S. C. 1092). The Supreme Court observed thus: "The Stamp Act being a taxing statute must be construed strictly, and if two meanings are equally possible, the meaning in favour of the subject must be given effect to". 13. It is clear from the discussions above that, to make a document liable to stamp duty as a mortgage deed, it is not enough if the document purports to effect a transfer, it must transfer and to effect a transfer the document must be registered. On the other hand the Full Bench decision of The Madras High Court, A.I.R. 1969 Mad.l and of the Andhra Pradesh High Court, A.I.R. 1968 A.P.213 and some other pronouncements have taken a different view, in that the mortgage deed in order to attract stamp duty need not be registered. It is enough if the deed is executed. It therefore follows that two meanings are equally possible and therefore, going by the principle enunciated if Sidhnath's case, the meaning given by me, inasmuch as the same is in favour on the subject, requires to be accepted. 14. The deed in question, considered in the light of the above principles, cannot be said to be a'mortgage deed' within the meaning of S.2 (n) liable to be charged with duty under S.3 of The Stamp Act. If that be so, the order under challenge is liable to be set aside. No other point arises for consideration in this revision. The order under challenge therefore is set aside. C.R.P. is allowed. No costs.