C.S.P. Singh. J.
1. This is a reference under Section 57 of the Indian Stamp Act made at the instance of Somaiya Organics (India) Ltd.
2. The Godavari Sugar Mills Ltd. (which for convenience, will be referred to as 'the Godavari Sugar Mills') entered into a technical collaboration agreement with Messrs. Melle Besons, and it is said that in this connection pursuant to the resolution of its Board of Directors passed on October 23. 1964, the Godavari Sugar Mills obtained a deferred payment guarantee upto the limit of Rs. 65,00,000/-from the Punjab National Bank Ltd. in favour of Messrs. Speichim Paris, on an equitable mortgage by deposit of title deeds of its property.
3. The Godavari Sugar Mills was the owner of property consisting of land and buildings which included a factory and residential accommodation for its employees. On March 2, 1962, the Godavari Sugar Mills resolved to sell the land, buildings and machinery to the Somaiya Organics (India) Ltd. (referred to hereinafter as 'Somaiya Organics') for a consideration of Rs. 36,64,678/- and on May 20, 1968, a sale deed was executed pursuant to the resolution. The sale-deed recited that the land and buildings were conveyed for a consideration of Rs. 7,76,000/- while the balance of Rupees 28,88,678/- represented the price of machinery, vehicles, stores and other goods, which were treated as movable items and the transfer of which had been completed by manual delivery. It was also recited that the entire property sold was free from charges or encumbrances. Treating the document to be a conveyance for a consideration of Rupees 7,76,000/- only, stamp duty of Rs. 35,000/-was paid under Article 23, Schedule 1-B of the U. P. Stamps (Amendment) Act. 1962. Subsequently, it is said that the parties discovered that the recital that the property was free from charges and encumbrances was incorrect and it was recalled that an equitable mortgage with deposit of title deeds, had been created in favour of the Punjab National Bank Ltd. On September 17, 1963. the Board of Directors of the Godavari Sugar Mills held a meeting and pursuant to the resolution passed therein, a deed of declaration was executed by two directors on behalf of the Godavari Sugar Mills on October 28, 1968, reciting that the property mentioned in the sale deed of May 20, 1968, was subject to an equitable mortgage by deposit of title deeds in favour of the Punjab National Bank Ltd. Similarly, pursuant to a meeting held on September 17. 1968, of its Board of Directors. Somiya Organics executed a similar deed of declaration on October 28. 1968. Stamp duty of Rs. 43.50 (sic) (3.50 ?) was paid on each of the two deeds of declaration.
4. Three documents, namely, the sale deed of May 20, 1968, and the two deeds of declaration dated October 20, 1968, were presented before the Sub-Registrar. Hate, district Deoria, for registration. He has impounded them under Section 33 of the Stamp Act and sent them to the Collector, Deoria under Section 38(2) of the Act for necessary action. He reported that on the basis of Section 4 and Section 24 of the aforesaid Act, the consideration of the sale-deed read with the two declarations should be deemed to be Rs. 7,76,000/- plus Rs. 120,00,000 plus Rs. 65,00,000/- amounting in all Rs. 1,92,76,000/- and that ad valorem duty should be calculated accordingly. The deeds of declaration should be treated as supplementary deeds on each of which a duty of Rs. 4,50 and not Rs. 3.50 was payable. Accordingly, he reported a total deficiency of Rupees 3,32,422/-. The Collector. Deoria was unable to arrive at any definite opinion in the matter, and consequently referred the case to the Chief Controlling Revenue Authority under Section 56(2) of the Stamp Act. The Chief Controlling Revenue Authority considered the matter and has now, with its opinion, referred the case to this Court. It has framed the following questions:--
(1) Whether in view of the above opinion of the Board, the principal sale-deed dated 20-5-1968 is a conveyance not only of the lands and buildings but also of the machineries fixed in the earth in consideration of Rs. 36,64,678/-, in the light of Section 24 of the Stamp Act and is chargeable with a duty of Rs. 9,97,425/-under Article 23 Schedule I-B of the U. P. Stamp (Amendment) Act. 1962, as against Rs. 35,000/- paid? or
(2) Whether the sale-deed aforesaid is a conveyance only of lands and buildings in consideration of Rs. 7,76,000/-plus Rs. 1,85.00,000/- total Rs. 1,92,76,000/-in the light of Section 24 of the Stamp Act and is chargeable with a duty of Rs. 8,67,420/- under Article 23 aforesaid as against Rs. 35,000/- paid? or
(3) Whether the sale-deed aforesaid does not fall within the ambit of Sec-Hoji 24 of the Stamp Act and is a conveyance of the lands and buildings along with machineries fixed in the earth in consideration of Rs. 36,64,678/- and is chargeable with a duty of Rs. 1,74,925/-under Article 23 aforesaid as against Rs. 35,000/- paid or
(4) Whether the sale-deed aforesaid does not fall within the ambit of Section 24 of the Stamp Act and is conveyance of lands and buildings only in consideration of Rs. 7,76,000/- only and is sufficiently stamped with a duty of Rs. 35,000/- under Article 23 aforesaid, or
(5) If the sale-deed aforesaid does not fall under any of the alternatives mentioned above, what should be deemed to be its consideration for payment of stamp duty under Article 23 aforesaid read with Section 4 and Section 24 of the Stamp Act?
(6) Whether the other two documents are supplementary deeds within the meaning of Section 4 of the Stamp Act and were liable as such to a duty of Rs. 4.50 as against Rs. 3.50 paid in each case?
5. Questions Nos. 1 to 5 relate to the question as to what is the duty chargeable under the Stamp Act in respect of the sale-deed. Question No. 6 relates to the duty chargeable in respect of the two supplementary deeds. In order to avoid repetition in answering the first five questions, we are of the view that we should substitute them by the following question:--
'What is the value of the consideration of the sale-deed for the purposes of charge of duty under Article 23, Schedule I-B of the Stamp Act?'
6. The sixth question as framed is with reference to the other two documents, and brings out the controversy between the parties precisely and as such requires no refraining. Tbe two questions which now call for an answer from us are as follows:
1) What is the correct duty chargeable under the Stamp Act in respect of the sale-deed dated 20-6-1968?
2) Whether the other two documents are supplementary deeds within the meaning of Section 4 of the Stamp Act and were liable as such to a duty of Rs. 4.50 as against Rs. 3.50 paid in each case?
7. We propose to answer the second question first. In order to decide this question, the relevant part of Section 4 of the Stamp Act may be quoted, which is as follows:--
'4 (1) Where, in the case of any sale, mortgage or settlement, several instruments are employed for completing the transaction, the principal instrument only shall be chargeable with the duty prescribed in Schedule I-B for conveyance, mortgage or settlement, and each of the other instruments shall be chargeable with a duty of four rupees and fifty paise instead of the duty, if any. prescribed for it in that schedule.'
8. It will be seen that for the application of Section 4 of the Stamp Act, more than one instrument should be employed for completing the transaction. In the present case, the transaction is one of sale, and it has to be seen as to whether the other two documents were such as were employed for the purposes of completing, the transaction between the parties. In the sale-deed, it was recited that the vendor covenanted that the entire property was sold free from all sorts of transfers, charges or encumbrances created by the vendor in favour of any one, and that in the case the vendee had to pay any amount by way of charge, transfer, or encumbrance created by the vendor on the property sold, the vendee would be entitled to get back the entire sale consideration with an interest of Re. 1/- per cent per month from the vendor. In the second deed executed by the Godavari Sugar Mills Ltd. in paragraph 5, it was stated that it was the intention neither of the Godavari Sugar Mills, or Somaiya Organics India Ltd., to transfer the said immovable property free from the charge created by the company in favour of the Bank by way of equitable mortgage by deposit of title deed. In paragraph 6, it was stated that the intention of the parties was that the said immovable property should be transferred subject to the charge created in favour of the Bank. In the deed executed by Somaiya Organics Ltd. similar recitals are contained in paragraphs 5 and 6 of the deed. From these recitals it follows that the sale-deed, which is the first document executed by the parties did not contain all the terms settled between the parties. The terms for the sale are contained not only in the first deed, but also in the two subsequent deeds. The transaction of sale was as such completed by three instruments viz. the sale-deed and the other two deeds both dated 28-10-1968, one executed by Messrs Godavari Sugar Mills Ltd. and the other by Messrs Somaiya Organics India Ltd. That being so, the case clearly comes within the purview of Section 4 of the Act. Our answer to the second question, is that the two documents aforesaid came within the purview of Section 4 of the Act and the duty payable is Rs. 4.50/-as against Rs. 3.50 paid in each case.
9. Coming now to the question as reframed, before embarking upon a consideration of the various contentions raised on behalf of the parties, it is necessary to resolve a factual misconception that has crept in the order of the Chief Controlling Authority. The Chief Controlling Authority has calculated the value of the sale-deed for the purposes of duty in the following manner:--
1) Sale consideration in respect of immovable property as set out in the sale-deed--Rs. 7,76,000/-.
2) Sale consideration for the machinery, vehicles, stores, finished goods etc. which were described as movable items in the sale-deed but were taken to be as immovable properties by the authorities.--Rs. 28,88,678/-.
3) The amount secured by the Punjab National Bank by equitable mortgage by deposit of title deed of the property for deferred payment guarantee --Rs. 65,00,000/-.
4) Amount due on loan facility sanctioned by the Punjab National Bank in favour of Messrs. Somaiya Organics India Ltd. on the guarantee of Shri K.J. Somaiya Shri S K. Somaiya and Messrs. Godavari Sugar Mills Ltd.--Rs. 1,20,00,000
9-A. The amounts of Rs. 65,00,000 and Rs. 1,20,00,000/- have been included in the value of the sale consideration by the application of Section 24 of the Act. Before Section 24 of the Act can apply, it must be shown that the property which was transferred, was subject, either certainly or contingently to the payment of any money, whether constituting a charge or encumbrance upon the property or not. The property sold in the present case was the immoveable and movable properties of the Godavari Sugar Mills Ltd. and before the demand loan of Rs. 1,20,00,000/- could be added on to the sale consideration by virtue of application of Section 24 of the Act, it must be shown that the property sold was subject to the payment of that amount. The letter of the Punjab National Bank is annexed to the paper book as Annexure '13' and is dated 16th October 1964.
Two facilities are granted by the Punjab National Bank to Messrs Somaiya Organics. The first facility being a demand loan for an amount of Rs. 1,20,00,000/-. The security mentioned for that loan is the entire asset of the company and hypothecation of machinery not embedded to the ground till installation to be regularly mortgaged thereafter the estimated value of which was calculated at Rs. 3,37,00,000/-. The second facility was deferred payment guarantee for an amount of Rs. 65,00,000/- and the security in respect of this amount was the registered mortgage of the entire block assets of the company and hypothecation of machinery not embedded to the ground till installation to be regularly mortgaged thereafter, as also indemnity from the company and counter-guarantee from the guarantor. We are at present concerned with the demand loan of Es. 1.20,00,000/-. The document makes it clear that the property given in security which was estimated at Rs. 3,37,00,000/-was the property of Messrs. Somaiya Organics India Ltd. and not that of the Godavari Sugar Mills Ltd. This conclusion is further strengthened by a recital in this letter where it is stated that the value of the capital assets which belonged to the Godavari Sugar Mills Ltd. was only Rs. 62,89,850/- as valued by Messrs. Toplis and Harding (Easter) Private Ltd., If the value of Captainganj Distillery was only Rs. 62,89,850/-, it is inconceivable that a demand loan of Rs. 1,20,00,000/-could be given against a security which was much less in value. That being so, the Chief Controlling Revenue Authority was in error in including the amount of Rs. 1,20,00,000/- in the value of the sale consideration for the purposes of duty. The demand loan of Rs. 1,20,00,000 which was granted by the Punjab National Bank in favour of Somaiya Organics India Ltd. was not in any way related to the property demised.
10. The question of inclusion of Rs. 28,88,678/- which on the recitals contained in the sale was said to represent the properties for machinery, vehicles, stores, finished goods etc. may now be considered. The Chief Controlling Authority has sought to include this amount on the basis that the sale-deed was not only of the lands and buildings, but also of the fixed machinery etc. and that being so, the entire amount of sale consideration had to be included for the purposes of duty. The relevant part of the sale-deed may usefully be quoted,--
'.....the vendor hereby transfers with effect from first June one thousand nine hundred and sixtyseven, all the lights, title, interest in the plots given in the Schedule 'A' along with the buildings standing thereon in favour of the vendee for a sum of Rs. 7,76,000/- (Rupees seven lakhs seventy six thousand only) which the vendee will pay to the vendor by allotment of 7,760 (seven thousand seven hundered and sixty) fully paid-up equity shares of the face value of Rs. 100/- each for consideration in lieu of' cash'.
11. Schedule 'A' to the sale-deed gives details of immoveable properties that have been sold. It does not mention any machinery, vehicles, stores, finished goods etc. as having been conveyed by the sale deed.
12. The learned Advocate General has urged that the intention behind the sale-deed was to transfer the entire properties of the Godawari Sugar Mills and that the machinery, and vehicles etc. were also transferred by the deed, and as the properties were immoveable properties, the value of these properties too had to be taken into account. We are unable to agree with this contention. Although, there is a recital in the sale-deed that the vendor i. e. Messrs. Godavari Sugar Mills have resolved to sell all the properties mentioned in Schedule 'A' with all the buildings, situated on the aforesaid land and all the machinery either fixed in the earth or lying on the surface on favour of the vendees for a consideration of Rs. 36,64,678/- yet no effort was made by the vendor to effect the transfer of what was branded as moveable items by the deed in question. The wordings of the deed are clear, and only one conclusion is possible, that the deed intended to transfer only the property mentioned in Schedule 'A' and the buildings situated therein. It did not purport to transfer the other properties which were described as moveable properties. The authorities constituted under the Act have to adjudge the duty chargeable on a deed as presented by the executants. It is not permissible for them to embark upon an enquiry as to what the intention of the parties was when executing the deed, and then to fix a duty on such items of property which in their opinion the parties contemplated to transfer. The fact that the sale-deed contains recitals in respect of other transactions between the parties would not affect the duty, in case the deed which is sought to be registered does not affect the transfer of these properties. In this context, the decision of the Calcutta High Court in the matter of a Reference from the Board of Revenue under Section 46 of the Stamp Act 1879, (1896) ILR 23 Cal 283 is of assistance.
13. Counsel for the parties in this context have referred to decisions on the question as to whether machineries which are embedded to the earth would constitute immoveable property. It is, however, not necessary to refer to these authorities, for if the sale-deed purported to transfer these properties, then in view of definition of the word 'conveyance' given in Section 2(10) of the Act, the question as to whether the properties were moveable or immoveable will not be relevant, for both movable and immovable properties are chargeable to the same duty under item 23 of the Schedule. Thus the addition of Rs. 28.88,678/ in the sale consideration for the purposes of calculating the duty was uncalled for.
14. This brings us to the question as to whether the amount of Rs. 65,00,000 which had been secured by an equitable mortgage by deposit of title deeds with the Punjab National Bank by the Godavari Sugar Mills could be included in the sale consideration in view of Section 24 of the Act. Section 24 of the Act so far as it is relevant may now be usefully quoted:--
'24. Where any property is transferred to any person in consideration, wholly or in part, of any debt due to him, or subject either certainly or contingently to the payment or transfer of any money or stock, whether being or constituting a charge or incumbrance upon the property or not such debt, money or stock is to be deemed the whole or part, as the case may be. of the consideration in respect whereof the transfer is chargeable with ad valorem duty: Explanation:-- In the case of a sale of property subject to a mortgage or other incumbrance. any unpaid mortgage-money or money charged, together with the interest (if any) due on the same, shall be deemed to be part of the consideration for the sale: .....'
15. In order to consider the applicability of Section 24 of the Act. it is necessary to refer again to the equitable mortgage created by Godavari Sugar Mills Ltd. in favour of Punjab National Bank. Annexure 'VI' is an extract from the minutes of the meeting of the Board of Directors of the Godavari Sugar Mills Ltd. held on 23rd October 1964. It appears from the minutes of that meeting that the Punjab National Bank by a letter of 16th October 1964 granted certain (facilities to Messrs. Somaiya Organics (India) Ltd. and one of such facilities was with regard to the deferred payment In favour of Messrs Speichim Paris in connection with the supply of plant and machinery by them to Somaiya Organics (India) Ltd. was likely to take some time, As the formalities of completing the guarantee in favour of Somaiya Organics (India) Ltd. was likely to take sometime, Messrs. Godavari Sugar Mills requested that the Bank guarantee should be initially issued on their behalf and the liabilities which the Bank would assume be secured by equitable mortgage by deposit of title deed of immovable property at Captainganj which is said to be of the value of Rs. 62,89,850/-. This guarantee was later on transferred to the Somaiya Organics (India) Ltd. Annexure 'IX' is a letter written on behalf of Godavari Sugar Mills in connection with deferred payment guarantee. In that letter, the recitals are as follows:--
'We also record that pursuant to the authority given to our Director Shri K. J. Somaiya in that behalf, we have through Shri K.J. Somaiya deposited with you all the title deeds of our immovable properties at Captainganj with intent to create security thereon by way of equitable mortgage, the intention of the parties being that your Bank may look to the said security and reimburse realise and recover all monies that the Bank have to pay or disburse by reason or as a result of or in connection with the issue of the above captioned guarantee, and also all costs, charges and expenses which the Bank may incur (and in case of legal costs the attorney and client costs).
We also send herewith the counter-Indemnity duly executed by us and our two Directors Shri K.J. Somaiya and Shri S.K. Somaiya.'
16. It has been urged on behalf of the applicants that Section 24 of the Act is not applicable inasmuch as the sale has not been made subject either 'certainly' or 'contingently' to the payment of the money secured by the equitable mortgage and further that inasmuch as the Bank had not paid any amount to the Paris firm, it could not be said that any contingent liability had arisen at the time when the deed was executed. Elucidating the first contention, it has been urged that Section 24 of the Act applies only to cases where the sale itself is subject to the payment of money, and this fact is clear from the explanation appended to Section 24 of the Act. and the mere fact that the property is subject to any charge or encumbrance, could not attract the applicability of Section 24 of the Act. In this connection reference has been made to a decision of the Supreme Court in the case of Board of Revenue U. P. v. R.S. Sidhnath Mehrotra : 2SCR269 and Sidhnath Mehrotra v. Board of Revenue : AIR1959All655 . In the Supreme Court case, the main controversy was with reference to the explanation to Section 24 of the Stamp Act. Their Lordships of the Supreme Court while interpreting the phrase 'sale of property subject to a mortgage' in the explanation, held that unless the sale itself is made subject to a mortgage, the mere fact that the property which is sold is mortgaged, would not bring into play the provisions of Section 24 of the Act. In taking this view, their Lordships of the Supreme Court confirmed the decision of this Court in : AIR1959All655 (supra). Thus, it follows that the phrase 'sale of property subject to a mortgage' applies only, if the mortgage property is sold subject to the mortgage, and not whenever mortgage property is sold. Let us now examine whether the sale was subject to the equitable mortgage or not. The first sale deed of the 20th May 1968 contains no mention of any charge at all. but as has been seen, the transaction of sale has been completed by more instruments than one and as such a reference to the two other deeds executed on the 28th October 1968 by Godavari Sugar Mills Ltd. and Somaiya Orga-nics (India) Ltd. is necessary. The supplementary deed executed by Godavari Sugar Mills Ltd. is Annexure 'II' to the petition. Paragraph 6 of that supplementary deed may be quoted:--
'We solemnly and sincerely declare and say that the intention of the Company as also the S. O. I. L. was that the said immoveable property should be transferred subject to the charge created in favour of the Bank by the Company by deposit of title deeds on the 15th day of December 1964 as stated in paragraph 3 above.'
The deed executed by Somaiya Organics (India) Ltd. is Annexure 'III' to the petition. Paragraph 6 of that deed is similar to the supplementary deed executed by Godavari Sugar Mills Ltd. and runs as under:--
'6. We solemnly and sincerely declare and say that the intention of the Company as also of the S. O. I. L. was that the said immovable property should be transferred subject to the charge created in favour of the Bank by the Company by way of deposit of title deeds on the 15th day of December. 1964, as stated in paragraph 3 above.'
17. The words in the two deeds are that the said immovable property. should be transferred subject to the charge created in favour of the Bank by the Company by depost of title deeds. It is difficult to see how it can be said that the sale was not subject to the equitable mortgage. That being so, the cases relied upon by the applicants are not of any help. The question now is whether even if the sale was subject to the equitable mortgage, it can be said in the circumstances, that it was subject either 'certainly' or 'contingently' to the payment of any money. Two words are used in Section 24. One is 'certainly' and the other is 'contingently'. Both these words carry different meanings. The word 'certainly' means 'indubitably-infallibly' while the word 'contingently' means 'of uncertain occurrence, accidental; conditional'. These words have diametrically opposite meanings and are not 'synonyms'. In the present case, it cannot be said that the money was certainly payable by the Godavari Sugar Mills Ltd. in respect of deferred payment guarantee, but it remains to be seen as to whether it was 'contingently payable.' Counsel for the applicants has relied on the circumstance that inasmuch as no money had been borrowed from the Bank on the date when the sale-deed was executed, there was (no?) 'contingent liability' at all within the meaning of the section. If money had been actually borrowed on the guarantee and a debt created, it would come within the expression 'certainly payable' and the question of it being 'contingently payable' would not arise at all. If the word 'contingently' were to apply only to cases where actual borrowing has taken place, the word 'certainly' used in the section would become redundant. An interpretation which renders a certain part of the statute otiose is not to be readily accepted. This argument as such does not appear to be sound. The two expressions 'certainly' and 'contingently' have to be given a full effect. as they seem to be designedly used by the Legislature in the section in order to widen the scope of Section 24 of the Act. There seems to be dearth of authority on the question in the form in which it has arisen before us. No direct authority of any Court in India has been cited by any of the parties which would throw light on the controversy as raised. This section of the Stamp Act. however corresponds to Section 73 of the English Stamp Act of 1870 (33 and 34 Victoria Law Reports -- The Statutes Vol. V 1870) and Section 57 of the English Stamp Act of 1891 (54 and 55 Victoria -- Law Reports Statutes 1891, Vol. XXVIII). Section 73 of the English Stamp Act 1870 may be quoted:--
'Where any property is conveyed to any person in consideration, wholly or in part, of any debt due to him on subject either certainly or contingently to the payment or transfer of any money or stock, whether being or constituting a charge or incumbrance upon the property or not, such debt, money, or stock is to be deemed the whole or part, as the case may be. of the consideration in respect whereof the conveyance is chargeable with ad valorem duty.'
Section 57 of the English Stamp Act. 1891 may also be quoted:--
'Where any property is conveyed to any person in consideration, wholly or in Dart of any debt due to him. or subject either certainly or contingently to the payment or transfer of any money of stock, whether being or constituting a charge or incumbrance upon the property or not. the debt, money, or stock is to be deemed the whole or part, as the case may be, of the consideration in respect whereof the conveyance is chargeable with ad valorem duty.'
It i's apparent that Section 24 of our Stamp Act corresponds to Sec, 73 of the Stamp Act 1870 and Section 57 of the Stamp Act 1891. In the Underground Electric Rly. Co. of London Ltd. v. Commrs. of Inland Revenue. (1905) 1 KB 174 the Metropolitan District Electric Traction Company Limited sold its entire undertaking to the Underground Electric Railways Company of London. The consideration for sale were certain sums of money which were payable in cash and shares of the vendee Company. Clause (3) of the agreement provided:--
'The profits of the new company available for dividend in respect of each year shall be applied in the following order and manner -- that is to say;--1st. In payment of a cumulative dividend at the rate of 5 per cent, per annum up to the end of such year on the amount for the time being paid up on any shares for the time being issued by the new company; and 2ndly. In paying to the traction Company or its assigns as a further part of the consideration for the said sale such a sum as shall be equal to a dividend of 3 per cent, for such year on the amount for the time being paid up on such of the original ordinary share capital of 5,000.000 . in the new company as shall for the time being have been issued by the new company. The Commissioners found that at the date of the agreement the whole of the ordinary share capital of the new company to the amount of 5,000.000 had been issued and that the amount paid up was 1300,000 upon which sum a dividend of 3 per cent, for a year would amount to 39,000 . The Commissioners were of opinion that the sum contingently payable out of profits in each year under Clause 3, Sub-clause (2) was part of the consideration for the sale, and that so far as such sum was capable of ascertainment at the date of the agreement. it was liable to ad valorem conveyance duty at the rate of 10 s. per cent.'
The case was sought to be brought within the provisions of Section 56 Sub-section (2) of the Act which read as under:--
'56 (2) Where the consideration, or any part of the consideration, for a conveyance on sale consists of money payable periodically for a definite period exceeding twenty years or in perpetuity, or for any indefinite period not terminable with life, the conveyance is to be charged in respect of that consideration with ad valorem duty on the total amount which will or may, according to the terms of the sale, be payable during the period of twenty years next after the day of the date of the instrument.'
One of the contentions raised, which had found favour with the trial Judge was that the money was payable subject to two contingencies viz. the existence of sufficiency of profit to pay first a dividend of 5 per cent, and then a further dividend of 3 per cent, and as such it could not be said that the money was payable within the meaning of that subsection. Referring to this argument, the court of appeal observed:--
'The question remains that the Section deals with 'money payable', and that expression, it is said, does not embrace money which is only payable on a contingency. If it is once arrived at that the money to which the section refers is money which may be payable on a contingency. I am not in the least pressed by the difficulty that several uncertainties combine to make one contingency. It does not seem to me to matter how many factors that contingency embraces: it is simply one contingency, although a number of things may have to happen in order to bring about the event on which this payment will have to be made. That being so. I think the question really narrows itself down to this -- Do the words 'money payable' in the section embrace money payable on a contingency ?
The argument for the Crown drawn from the use of the word 'may' in the section, in support of the suggestion that payment on a contingency was included, has been successfully contested by the counsel for the company; and. therefore, I do not rely upon that word in coming to the conclusion that the words 'money payable' include money payable on a contingency. I come to that conclusion for the same reasons that actuated the Court in the cases that have been cited; no doubt those were cases of mortgage or settlement, but the words were equally absolute and did not in themselves import any contemplation of contingency, but they were nevertheless held to cover payments upon a contingency. Canning (Lord) v. Raper. (1852) 1 E & B 164 was a case of mortgage, in which it was expressly decided that a security for contingent future payments was as much within the meaning of the words 'repayment of money to be thereafter lent, advanced, or paid' as an absolute security would be ......'
The matter was then taken up before the House of Lords. The decision given by the House of Lords is reported in Underground Electric Rlys. Co. of London Ltd. v. Commrs. of Inland Revenue, 1906 AC 21. The House of Lords in the decision referred not only to Section 56 but also to Section 57 of the Act which as has been seen is in pari materia with our Act. Referring to the various arguments on page 23 of the report, the noble Lords observed:--
'It is contended that the words 'money payable periodically' in that Section do not apply to money payable on a contingency because contingent payments are dealt with by Section 57. I do not myself see how Section 57 assists the appellants. Its effect seems to be that where the consideration for a sale consists of money payable on a contingency, such money is to be taken into account in ascertaining the stamp duty to be paid on the conveyance of the property sold. I see nothing in Section 57 which either cuts down or excludes Section 56. It is also contended that the words 'money payable' in Section 56 do not include money payable upon a contingency, because the contingency may never happen and no money may be payable. But the words of Section 56 appear to me to be wide enough to cover all moneys which may become payable, and the latter part of Clause 2 certainly favours this construction. Moreover. Section 57 says that money payable on a contingency is to be taken into account; and that, to my mind, removes any doubt which might otherwise arise as to the inclusion of contingent payments in Section 56.
Then it is said that the purchasing company may be wound up. or may at some future tune reduce its capital and so reduce in future the minimum sum payable periodically to the selling company. No doubt these are possible events, but at most they are merely other contingencies on which the payment of the minimum sum depends. Unless the contingency of winding up or reducing the capital happens, the minimum sum continues to be payable. The fact that the minimum sum is payable on more contingencies than one is in my opinion quite immaterial. They merely affect the ability of the purchasing company to pay, which is the only contingency of any importance.'
In another case Underground Electric Rlys. Co. of London. Ltd. and Glyn, Mills, Curric and Co. v. Commrs. of Inland Revenue. (1914) 3 KB 210 the appellants had agreed, provided a sufficient number of the holders of ordinary stock of the Central London Railways Company would take guaranteed stock in exchange for their ordinary stock, to guarantee interest at 4 per cent on such guaranteed stock, payable half-yearly, if and to the extent that the profit of the Central London Railways Company were not sufficient to pay that amount of interest. At the date of the deed it was not known whether a sufficient number of holders of ordinary stock would accede to the arrangement or whether all would so accede, but if they all acceded and if the Central London Railway Company made no profits in any year, the appellants would be liable to pay 120,000 in that year, being 4 per cent, on 3,000,000 . The Commissioner had assessed the duty on the maximum payment which was secured by the deed. Considering the argument that the maximum amount could not be taxed in as much as it depended on a contingency, the Court of Appeal on page 219 observed:--
'In the City of London Brewery Co. V. Commissioners of Inland Revenue, (1899) 1 QB 121, where there was a power to issue 540,000 debenture stock in exchange for an existing stock and a trust deed securing payment of the stock if issued, stamp duty was held payable on the whole amount, though all or part of it might never be issued.
These and other cases seem to me to establish that there may be a sum or a definite and certain sum, though it is payable on a contingency and may never become payable, and though the amount payable may depend on contingencies. It is said, however, that in all these cases there was a specified sum or sums at the date of the deed, and that if there is no sum specified at the date of the deed, no stamp duty is payable. I do not think that this is true of the first Underground Railway Case. (1905) 1 KB 174,where any sum up to 3 per cent, might be payable depending on amount of profits, and the deed was assessed on the maximum payment which might be required. This is what the Commissioners have done in this case in assessing on the maximum payment which the deed may secure, though it depends on contingencies whether that payment may have to be made.'
Though the first two cases related to Section 56(2) of the Stamp Act, 1891 yet, as has been seen, the question as to whether duty is chargeable on an instrument even though the money secured by that depends upon a contingency which may never materialise was considered, and the view taken was that the existence of contingencies would not be sufficient to take the instrument out of the taxing provision. The decision in 1914-3 KB 210 (supra) is also to the same effect. We are in respectful agreement with the view expressed in these cases. Applying the principles in these cases to the present case, we find that there was an existing equitable mortgage of the properties which were the subject-matter of the transfer, and these properties were liable for repayment of such moneys as the Bank may advance subject to the maximum of Rs. 65,00,000. It appears that although the liabilities for payment would have arisen only in case the Bank had made advances, but on that contingency occurring the liability was undoubtedly there. Thus the amount of Rs. 65,00,000/- which was secured by the equitable mortgage of the properties which had been transferred was rightly included for the purposes of levying duty. The value on which the duty was leviable in respect of the sale-deed was Rs. 7,76,000/- plus Rs. 65,00,000 i.e. Rs. 72,76,000/-. Our answer to the first question is that the value of the consideration for the purposes of determining the duty under Schedule I-B of Article 23 of the Stamp Act is Rs. 72,76,000.
18. To sum up, our conclusion, as respects the first question, as framed by us, is that the value of the consideration for the sale-deed for the purposes of charging duty under Article 23 Schedule I-B of the Stamp Act is Rs. 72,76,000. Our answer to the second question is that the two deeds in question come within the provisions of Section 4 of the Act and the duty is Rs. 4.50 as against Rs. 3.50 paid, in each case.
19. In view of the partial success and failure of the parties in the case, the parties shall bear their own costs. Counsel's fee is assessed at Rs. 200/-.