Hari Swarup, J.
1. This is a reference under the Stamp Act in a suit filed by a Company (M/s. Ram Chand and Sons Sugar Mills Private Limited). The plaintiff was required by the court per its order dated 21-7-1962 the furnishing of security as a condition for the maintenance of the injunction order. The relevant portion of the order was;
'Having regard to all the facts and circumstances of the case, I am of the opinion that the plaintiff must furnish adequate security to the extent of Rs. 22.61 lacs. The plaintiff has filed registration certificate showing that the mill property is free from encumbrance. According to the plaintiff's estimate its value is in the neighbourhood of 80 lacs, while according to the defendant, its value is near about 40 lacs. The plaintiff-applicant is, therefore, required to furnish security either in cash or of the aforesaid mill property to the extent of Rs. 22.61 lacs or for any other balance found due on account of cane cess tax or purchase tax. This security must be furnished to the satisfaction of this court by 18-8-1962.'
On the basis of this order, the company passed a resolution authorising some of its Directors to execute the necessary security bond. The resolution of the Board of Directors was passed on August 20, 1962 and it runs as under :
'Resolved that Shri Roshan Lal, Shri Jugal Kishore, Shri Ram Sarup and Smt. Padmavati are hereby authorised in their individual capacity to execute security bond as per orders of the District Judge Barabanki, in Suit No. 1 of 1962 for pledging the property of the company and incurring liability of payment individually on their moveable and immoveable property.'
On the basis of this resolution the bond in dispute was executed on 25th August, 1962. The above resolution was subsequently rectified at the meeting of the shareholders held on 14-8-1967 and the following further resolution was passed: 'Resolved further that the Company and its property shall be liable for the amount for which the security has been given.'
2. When the document was filed stamp duty was paid on the basis of the duty payable under Article 57 of the Schedule I-B of the Stamp Act. An objection was raised to the quantum of stamp duty paid on the document. The contention of the Revenue was that the document was chargeable with stamp duty under Article 40 of Schedule I-B and not Article 57. The contention was not accepted by the learned Civil Judge. He held that the document had not been executed by or on behalf of the plaintiff company and accordingly fell under Article 57 of Schedule I-B of the Act. The Chief Inspector of Stamps acting as Collector under the Stamp Act, feeling aggrieved by the order, has referred the following question for our opinion:
'Whether the document dated August 25, 1962 referred to above is a 'Mortgage Deed' within the meaning of Section 2, sub-sec. (17) of the Stamp Act, chargeable with a duty of Rs. 33,915.00 p. under Article 40 (b), Schedule I-B of the U. P. Stamp (Amendment) Act 1959.'
3. The character of the document has to be seen in the light of the order passed by the court and the resolution of the company because the document itself refers to the court's order and the resolution of the Company. As already seen, the court had directed the plaintiff company to furnish the security either in cash or of the properties of the plaintiffs mill. The resolution of the Company had authorised the Directors Lala Roshan Lal, Lala Jugal Kishore, Lala Ram Sarup and Smt. Padmavati to execute the document for the purpose of 'Pledging the property of the company and incurring liability of payment individually on their moveable and immoveable property.' The reference in the resolution is to the order of the District Judge. In this context the word 'their' should be deemed to refer to the company and not to the individual Directors. The resolution therefore clearlyauthorised these Directors to pledge the properties of the company by way of security required under the order of the court. The intention of the company is further clear from the subsequent resolution passed by the share-holders of the Company on 14-8-1967 in which, even after the order of the learned civil Judge, it was resolved that the company and its property shall be liable for the amount for which the security had been given. The bond in dispute also shows that the security was in connection with the order of the court and was in respect of the properties mentioned in the schedule attached to the Deed. The schedule of properties given in the document contains the following entry:
'The Sugar Mill Building, Machinery and all furnitures and fixtures and all rights and interest situate at Barabanki bounded as below.'
Then the boundaries are given. Later on, again in the Deed is the assertion:
'The property mentioned in the Schedule below shall remain charged and be liable for payment of the amount as per order of the Hon'ble court or of the Appellate court that may be passed the property described in the schedule below can be sold and the amount mentioned above be realised.'
A reading of the document in question thus shows that the bond had been executed by the four Directors of the company on behalf of the company and they had by this document pledged the company's property for the payment of the amount that may be found ultimately due by the court against the Company. Under the Companies Act, Section 46, 'contract' on behalf of a company may be made as follows:
'(a) a contract which, if made between private persons, would by law be required to be in writing signed by the parties to be charged therewith, may be made on behalf of the company in writing signed by any person acting under its authority, express or implied, and may in the same manner be varied of discharged;
(b) ... ... ... ... ... ....
(2) A contract made according to this section shall bind the company.'
Hence it is not necessary that the deed should specifically state that the contract was being made in the name of the company. If the document shows that it was executed on behalf of the company, it will bind the company and will be deemed to be a document enteredinto by the company itself. We are therefore unable to accept the view of the learned Civil Judge that the present document has not been executed on behalf of the company.
4. The company in the present case was the plaintiff. Article 57 of Schedule I-B will therefore not be attracted. This view finds support from a decision of this court in K. K. Industries (P) Ltd v. Board of Revenue : AIR1964All519 . In Hunter v. Emperor (AIR 1942 Oudh 371) (SB) it was held that Article 57 applies only to the cases where the bond is executed not by the party concerned but by a third party. Article 57 was accordingly not applicable to the present deed.
5. Article 40 in Schedule I-B of the Stamp Act reads as under:
'Mortgage- Deed, not being an agreement relating to Deposit ofTitle-deeds Pawn or Pledge (No. 6), Bottomry Bond (No. 16). Mortgage of aCrop (No. 41), Respondentia Bond (No.56)or Security Bond (No. 57)-
When possession of the propertyor any part of the property comprised in such deed is given by the mortgageor agreed to be given :
The same duty as a Conveyance (No.23) for a consideration equal tothe amount secured by such deed.
When possession is not given oragreed to be given as aforesaid.
Thesame duty as a bond (No. 15) for the amount secured by such deed.
The term 'Mortgage-deed' has been defined in Sub-section (17) of Section 2 of the Stamp Act, as under:
' 'Mortgage-deed' includes every instrument whereby 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.'
The definition of the 'mortgage-deed' in the Stamp Act is thus a wider definition than is contained in the Transfer of Property Act, which runs as under:
'A mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability,'
The definition in the Stamp Act includes every instrument for the purpose of securing moneys mentioned in the definition, even if the transaction does not ultimately result in the transfer of an interest in immoveable property. If the deed creates to, or in favour of, another, even a right over or in respect of specified property, it will be a mortgage-deed. In Padamchand v. Chief Controlling R. A : AIR1970All644 it was observed in the judgment of T. P. Mukherjee, J. (at p. 645):
'It would be noticed that the connotation of mortgage involved in the definition given in Section 2(17) of the Act is much wider; in the first place, it is not restricted to immoveable property and, therefore, it includes pawn or pledge of movables, secondly, it is not restricted to transfer of an interest or right to property; it also includes a charge which creates a right to property, that is, a jus ad rem, as distinguished for a jus in rem created by a mortgage under the Transfer of Property Act.'
The deed in question, therefore, in our opinion, will fall within the definition of 'mortgage-deed' contained in Section 2(17) of the Stamp Act; and as it is nobody's case that the possession of the property had been transferred, Clause (b) of Article 40 of Schedule I-B shall be applicable.
6. Nobody has urged before us that in case the deed in question is chargeable as a mortgage-deed under Article 40 (b) of Schedule I-B of the Stamp Act, the amount of duty will not be Rs. 33,915.00 P. as suggested by the Chief Inspector of Stamps.
7. In the result, we are of opinion that the document in question is chargeable as a mortgage-deed under Article 40 (b) of Schedule I-B of the Stamp Act with a duty of Rs. 33,915.00 P.8. Let a copy of this order be sent to the Chief Inspector of Stamps acting as Collector under the Stamp Act, U. P. Allahabad.