R.R. Rastogi, J.
1. The questions referred to us for opinion under Section 57 of the Indian Stamp Act are:--
1. Whether an instrument of simple mortgage (Mortgage without possession of immovable property situated in an area to which the U. P. Town Improvement Act 1919 (VIII of 1919) as amended by the Local Self Government Laws (Amendment) Act, 1966 (XXIX of 1966) has been made applicable) is a deed of transfer of immovable property within the meaning of Section 67-H of the said Act?
2. Whether a public officer is barred from impounding (a document) under Section 33 and the Collector is barred from imposing any deficit duty and penalty under Section 40 and realising the same under Section 48 of the Stamp Act on a deed of transfer of immovable property situated in an area to which the U. P. Town Improvement Act, 1919 applied, on which stamp duty as payable under the Stamp Act only has been paid and the increased duty under Section 67-H of the Town Improvement Act has not been paid?
On 7-4-1973 M/s. Electronic Industries of India 24 G. T. Road. Mohan Nagar, Ghaziabad executed a mortgage deed in favour of the U. P. Financial Corporation whereby the property of the borrower situated at Ghaziabad within the area to which the U. P. Town Improvement Act applied, was mortgaged to secure a loan of Rupees 6,36,000/-.
2. On 1st September, 1973 the Inspector of Stamps examined this document. Having found that the document was not properly stamped he impounded the same in his capacity as Collector, appointed under the U. P. Government Notification No. C-4138/X525 dated August 28, 1928. According to the Inspector, the stamp duty was deficient by Rs. 1,272.00. M/s. Electronic Industries of India paid deficiency demanded from it under protest and then submitted an application under Section 45 of the Stamp Act for its refund. The main ground on which the application had been filed was that the duty was not payable. This gave rise to two questions which have already been stated above.
3. For the sake of facility, we will take up question No. 2 first. The controversy involved is whether the Collector had any authority to impound the document and to impose penalty under Sections 33 and 40 respectively. The Indian Stamp Act, 1899 contains a comprehensive scheme about the levy, collection and realisation of stamp duty chargeable under it on the various instruments enumerated in various Articles of the Schedules appended to it. It is a self contained Code. Section 2 of the aforesaid Act deals with the definition of the various words used in the Act. Section 3 provides for the instruments which should be chargeable with duty. Sections 10, 11 and 12 deal with the mode of using stamps. Section 13 provides the manner in which instruments upon stamped paper with impressed stamps have to be written. Section 27 requires that the consideration and all other facts and circumstances, affecting the chargeability of any instrument with duty, or the amount of such duty, should be fully and truly set forth in the instrument. Chapter IV deals with instruments not duly stamped. Section 33 of this Chapter deals with the power of impounding the documents by an officer authorised to do so if he finds that an instrument is not duly stamped. Section 40 empowers the Collector impounding any instrument to impose penalty not exceeding ten times of the amount of deficiency in duty. Section 48 makes the provisions for the recovery of duties and penalties from whom the same are due. Section 64, with which we are also concerned in the present case, is a provision dealing with the imposition of penalty for omission to comply with the provisions of Section 27. Section 27, as we have already said above, requires full facts and circumstances affecting charge-ability of the duty to be set forth,
4. These sections are followed by Schedules. In the instant case, we are concerned with Schedule I-B enacted by the State Legislature. This Schedule mentions the proper duty which would be payable on the deeds, instruments and documents mentioned in it. Article 40 is the relevant Article, which is to be interpreted in the present case. It deals with the amount of stamp duty, which would be payable on a mortgage deed. Article 40, however, provides that stamp duty payable on mortgage deed would be the same as in the case of a conveyance (Entry No. 23).
5. Having dealt with the scheme of the Stamp Act we now come to the U. P. Town Improvement Act, 1919 (hereinafter referred to as 'the Town Improvement Act'). The sole object of the enactment of this Act was to make provisions for the improvement and expansion of towns in Uttar Pradesh. For the first time in 1948 the State Legislature enacted the U. P. Town Improvement (Adaptation) Act, 1948. By this Act a new provision inserting Section 67-H was made. This section provided that the duty imposed by the Indian Stamp Act, 1899 on any deed of transfer of immovable property would, in the case of immovable property situated within the area to which this Act applies, be increased by I per cent on the value of the property transferred. Section 67-H was amended by the U. P. Town Improvement (Adaptation) (Amendment) Act, 1962, The object stated was:--
'.....this is enacted to enhance the rate of the surcharge from 1 per cent to 2 per cent. In 1967, however, this (Adaptation) Act 1948 was deleted by the U. P. Act No. XXIX of 1966 and an amendment was also made in Section 67-H. The amended Section 67-H reads as under:--
'67-H (1): The duty imposed by the Indian Stamps Act 1899 on any deed of transfer of immovable property shall, in the case of immovable property situated within an area to which this Act applies be increased by two per cent on the amount or value of the consideration with reference to which the duty is calculated under the said Act.
(2) All collections resulting from the said increase shall, after the deduction of incidental expenses, if any, be paid to the Trust by the State Government in such manner as may be prescribed by rules.
(3) For the purposes of this Section, Section 27 of the Indian Stamp Act, 1899 shall be so read and construed as if it specifically required the particulars referred to therein to be separately set forth in respect of:--
(a) property situated within the area notified, and
(b) Property situated outside such area:--
(4) For the purposes of this section, Section 64 of the Indian Stamp Act, 1899 shall be so read and construed as if it referred to the Trust as well as to the Government.
6. Now the question that is to be considered by us is whether the provisions of Sections 33 and 40 of the Stamp Act could be applied to the instruments on which duty required by Section 67-H has not been paid.
7. Having heard counsel for theparties, we are of the opinion that the duty payable under Section 67-H is different than the stamp duty which is to be paid under the Stamp Act. Section 67-H imposes duty on transfer of property. The Stamp Act does not make any provision for the payment of stamp duty on a deed of transfer. In fact it does not use the expression 'deed of transfer.' It is true that Section 67-H provides that the stamp duty on a deed of transfer would be increased by 2 per cent. But that does not mean that the provision of the Stamp Act would be deemed to apply to Section 67-H. It only means that the method and manner of payment of the duty contemplated by Section 67-H would be the same as that in the Stamp Act as a result whereof, although under Section 67-H stamp duty would be increased by 2 per cent, but this will have to be calculated on the value of the consideration disclosed in the document. The duty leviable under Section 67-H is in the form of surcharge payable under the said Act over and above the stamp duty. The duty payable under Section 67-H is assessed independently of the stamp duty. The transfer duty is calculated on the amount of the consideration set out in the conveyance. It is not to be calculated in accordance with the manner provided in the Stamp Act.
8. The Legislature applied only Sections 27 and 64 of the Stamp Act to a deed of transfer covered by Section 67-H. There is nothing in the Town Improvement Act which could show that the rest of the provisions of the Stamp Act would also apply. It does not appear logical to hold that where only two provisions from an existing Act have been incorporated into a subsequent Act, the remaining provisions of the previous Act can be deemed to be incorporated in the later Act.
9. At this place, a reference should be made to Article 23 of Schedule I-B of the Stamp Act which provides for the stamp duty payable on conveyances. The relevant portion of the Article is quoted below:--
wherethe amount or value of the consideration of such conveyance as set forththerein or the market value ofthe property which is the subject ot such conveyance, whichever is greater does not exceed Rs. 50.
Where itexceeds Rs. 900 but does not exceed Rs.1,000.
And for every Rs. 500 or part thereof in excess of Rs. 1,000.
Thirtyseven rupees and fifty paise.'
10. Article 23 extracted above would show that on the value of deed which exceeds Rs. 1,000.00 the stamp of Rupees 37.50 would be payable on every part of Rs. 500.00 apart from the maximum of Rs. 75.00. This method has not been followed or adopted in Section 67-H. The method laid down under Section 67-H is altogether different. The same is that stamp duty would be increased by two per cent on the amount or value of the consideration of the deed. Had the Legislature intended that the duty spoken in Section 67-H (to be) treated as the stamp duty, one fails to understand the reason as to why the Legislature would not have provided for the same manner or method of calculation as laid down in Article 23. This departure in the method of calculating the duty covered by Section 67-H is a strong circumstance leading to the irresistible conclusion that the duty payable under Section 67-H cannot be treated as the same which is required to be given under the Stamp Act. As already stated above it has to be assessed separately and independently of the Stamp Act.
11. The second difference is that the object and purpose of the levy of the stamp duty under the Stamp Act is different than that of Section 67-H. The Stamp Act is a fiscal legislation authorising the Government to realise the stamp duty on the instruments and documents stated above for its revenue. Section 67-H, however, has a limited object. The same being that the revenue realised under it would be payable to the Trust concerned, unlike the stamp duty which goes to the consolidated fund. Collection made under Section 67-H towards duty, after deduction of incidental expenses is paid to the trust by the State Government. Hence the money received under Section 67-H does not form part of the| consolidated fund of the State. The Stamp Act does not concern itself with the requirement of realisation of the stamp duty payable under Section 67-H.
12. A look at the various provisions of the Stamp Act would show that it is confined in its operation to the 'stamp duty chargeable' under Section 3 of the Act.
13. Furthermore, as already stressed above, the stamp duty does not deal with the affixation of stamps to an instrument for any purpose other than the levy of stamp duty. If the argument of the State counsel is accepted that the essential nature of the duty imposed under Section 67-H is the same as that of the stamp duty, the provisions for impounding the document would have been incorporated in Sections 27 and 64 of the Stamp Act itself. As the Legislature advisedly intended to differentiate between the two types of charges, no provision for its levy was made in the Stamp Act. That being so a deed of transfer cannot be impounded under Section 33 of the Stamp Act nor can it be subjected to penalty.
14. In Dayal Singh v. Collector of Stamps (AIR 1972 Delhi 131) a Special Bench of the aforesaid Court was called upon to interpret Sections 147 and 148 of the Delhi Municipal Corporation Act, which are in pari materia with Section 67-H of the Town Improvement Act. The Delhi Bench found that a document, on which the duty paid was insufficient was incapable of being proceeded with or impounded under Section 30 of the Stamp Act. It was also held that since Section 40 of the Stamp Act applied only when an instrument was impounded under Section 33 and when it was sent to the Collector under Section 38 of the Act. Section 40 did not apply to the duty on transfer of property. We agree with this decision. This was followed by another Bench of the same High Court in Sudarshan Talkies v. Collector of Stamps (AIR 1978 Delhi 112).
15. Coming to the first question, the argument of the Company was that since the instrument in question was a simple mortgage Section 67-H did not apply. He contended that a simple mortgage is not a transfer.
16. The word 'transfer' used in Section 67-H has a wide connotation. Its applicability cannot be confined to a particular type of transfer. What is required to be seen for applying Section 67-H is whether the document creates a right and title. If a document created a right or title, the same would be covered by the word, 'transfer' used in Section 67-H, Section 58 of the Transfer of Property Act is also helpful. It defines a mortgage as follows:--
'A mortgage is the transfer of an interest in specific immovable property for the sake of securing the payment advanced or to be advanced.'
Accordingly, it would be seen that the definition of the word mortgage given in Section 58 clearly provides that a mortgage is also a transfer. Seen in this context, the conclusion appears to be that the scope of Section 67-H cannot be restricted to transfers such as sale, gift or exchange etc. The Legislature advisedly used the word 'transfer' to cover all kinds of transactions under which the transfer of a right is made in favour of a third party. In the case of a simple mortgage as well, what is transferred is the power to sell which is one of the components that makes the ownership.
17. For these reasons, we answer question No. 1 in the affirmative. As a result, any default in payment of duty does not attract Section 33 of the Stamp Act. Hence, neither can an instrument be impounded nor can it be subjected to penalty under Section 40 of the said Act for failure to pay the duty contemplated by Section 67-H.
18. The second question is also answered in the affirmative. In the circumstances, the parties shall bear their own costs.