1. This revision is directed against the judgment of the learned District Judge, West Godavari in A. S. No. 29/65 by which be confirmed the order passed by the Subordinate Judge, Eluru in I. A. 323/64 in I. P. 2/60 on his file.
2. One Kayala Rajayya was adjudged insolvent in I. P. 2/60 on the file of the Subordinate Judge, Eluru. The Official Receiver, West Godavari in whom the properties of the insolvent vested, sold 62 cents of land comprised in R. S. No. 28/6 of Kothalaparru to the petitioner herein for Rs. 103. The petitioner paid the price and also furnished the non-judicial stamp paper to enable the Official Receiver to execute a conveyance and requested him for the same. The Official Receiver thereafter solicited instructions from the Insolvency Court as to whether he should ask the purchaser to furnish non-judicial stamp paper to cover the value of encumbrances, if any, to be ascertained from the purchaser. There is no knowing as to what instructions the Insolvency Court gave. The Petitioner-purchaser in I. A. 323/64 to direct the Official Receiver to execute a conveyance for the property purchase by her without reference to any encumbrances thereon or alternatively to direct a refund of the purchase money to her. The learned Subordinate Judge granted the alternative prayer and directed the Officer Receiver to refund the purchase money having negatived the petitioner's stand that she is not bound to value the encumbrances if any on the property for the purpose of furnishing non-judicial stamp paper to the Official Receiver. The petitioner carried the matter in appeal to the District Judge, West Godavari who, as already stated, confirmed the order of the Subordinate Judge. Hence this revision.
3. The learned counsel for the petitioner argued and rightly too, that both the Courts below were influenced by the erroneous impression that the property in question was sold by the Official Receiver subject to the encumbrances when in fact that was not the case. The proclamations relating to the sale were called for from the Official Receiver and they disclose that the property was sold without making mention of any encumbrances thereon. The learned counsel for the petitioner, therefore, contends that S. 24 of the Stamp Act has no application to the facts of this case. A reading of S. 24 of the Stamp Act seems to lend support to the contention urged for the petitioner that the encumbrances have to be valued for the purpose of ascertaining the ad-valorem duty if only the transfer is made subject to encumbrances and not otherwise. This view receives support from a Full Bench decision of the Allahabad High Court reported in Sidhnath v. Board of Revenue, : AIR1959All655 in which it was held that where immovable property, which is encumbered by a charge or mortgage, is sold but not subject to the encumbrance, then the amount of money constituting the charge or mortgage need not be added to the consideration mentioned, in the conveyance as the value of the property sold. It will be useful to extract the relevant passages occurring at page 657 of this decision:
'For the purpose of liability to stamp duty, encumbered property may be transferred either subject to the encumbrance or free from all encumbrances in the sense that the ultimate liability for the encumbrance shall not be the transferee. If it is transferred subject to the encumbrance the transferee undertake the liability of satisfying the encumbrance and if the encumbrance is his own its amount is set off towards the price. x x x It is also possible that no reference to the encumbrance may be made in the deed itself and the parties may be left to seek in the usual course . x x x x If, however, the property is sold subject to the encumbrance, the real price is the price paid plus the amount of the encumbrance. In such cases therefore S. 24 provides that the amount encumbrance will have to be added to the price in order to fix the amount on which ad valorem duty will have to be paid.
That being the purpose of the enactment, it becomes difficult to accept the contention that in all cases of transfer of encumbered properties, even if the sale is made free from encumbrances, the amount of the encumbrance should be added to the price paid for the purpose of stamp duty, x x x x x When the main section is applicable only to cases of transfer subject to an encumbrance the explanation too can apply only to such cases. The explanation could not enlarge the ambit of the section. It could only clarify its provision'.
It is therefore clear that if the property is sold otherwise than subject to encumbrances, the price for which it is sold alone has to be taken into consideration for the purpose of fixing the value of general stamp to be furnished by the purchaser for engrossing the conveyance. In this view, it has to be said that the order sought to be revised is not in accordance with law and is liable to be set aside.
4. In the result, the order of the Court below is set aside and the relief No. 1 sought in I. A. 323/64 is granted by directing the Official Receiver to execute a conveyance in favour of the petitioner accepting the general stamp paper furnished by her on the value of the amount for which she purchased the property. No order as to costs as the other side is not represented.
5. Petition allowed.