Das Gupta, J.
1. Where an instrument executed in Uttar Pradesh and consequently liable tostamp duty under the Indian Stamp Act as amended in Uttar Pradesh but relating toproperty in West Bengal bears stamps overprinted with the name of West Bengalcomes before a public officer of Uttar Pradesh, is such officer right inholding that the instrument is not duly stamped inasmuch as it does not bearstamps overprinted with the name of Uttar Pradesh That is the principalquestion which has arisen in this petition under Art. 32 of the Constitution.
2. The first petitioner, a Company incorporated under the Indian Company'sAct with its registered office at Calcutta, is the owner of a factory atVaranasi in the State of Uttar Pradesh. The petitioners numbers 2 and 3 are theshareholders of the first petitioner Company. The State of Uttar Pradesh havingagreed to advance a loan of Rs. 1,45,00,000/- on the mortgage of the Company'sassets at its jute mills at Budge Budge and at Ghusuri, all situated in WestBengal, the deed of mortgage was executed at Lucknow in the State of UttarPradesh on March 22, 1957. To this deed the first petitioner affixed stamps ofthe value of Rs. 1,08,751/- purchased from the Collector of Stamps, Calcutta.It was duly registered at Calcutta on April 5, 1957. Thereafter, on March 23,1957, by a deed executed between the first petitioner and the State of UttarPradesh a part of the mortgage property in West Bengal was released and in itsplace and stead a part of some properties of Uttar Pradesh were substituted.The deed of substitution was duly stamped and registered in Uttar Pradesh. Noobjection was then taken to the stamp affixed on the original deed of mortgage.In 1960 the first petitioner made a request to the state of Uttar Pradesh torelease a further part of the mortgage properties included in the originalmortgage deed and to accept in their place and stead the assets and propertiesof the Company's factory at Varanasi as substituted security. A draft deed forthe substitution was sent by the first petitioner to the Collector of Varanasifor ascertaining the stamp duty payable on it and for getting the benefits ofreduced rates of duty applicable in case of substitution of security. TheCollector referred the matter to the Board of Revenue for adjudication of theStamp duty on the document for substitution. Ultimately, the Board of Revenue,Uttar Pradesh, decided that as the original document had been executed at aplace within Uttar Pradesh it must bear stamps issued by the Uttar PradeshGovernment. It rejected the argument that the document of March 23, 1957 wasnot an instrument and therefore could bear the stamps issued by the West BengalGovernment. The Board of Revenue held that the Company was liable to pay, Rs.1,74,000/- as stamp duty on the document dated March 23, 1957, before it canavail of the concessional rate provided for in substituted security.Thereafter, the Collector of Varanasi, by a letter dated September 8, 1961,informed the first petitioner that (a) that the draft deed submitted by it wasa substituted security chargeable under Art. 40(c) of Schedule 1-B of the UttarPradesh Stamp Amendment Act, 1958, with a duty of Rs. 7,554/-, provided theoriginal mortgage deed of March 22, 1957, was 'first got properly stampedby payment of deficit duty of Rs. 1,74,000/-'. The letter ended with arequest for deposit of the deficit of Rs. 1,74,000/- on the mortgage deed ofMarch 22, 1957, and also for deposit of Rs. 7,554/- for the deed ofsubstitution to be executed. This letter from the Collector was followed by aletter dated November 17, 1961, from the Tehsildar, Chandauli, Varanasi,demanding payment of Rs. 1,74,000/- within a week of the receipt of the letter.On November 30, the first petitioner replied to this letter asking for amonth's time. The present petition was filed on December 22, 1961.
3. Primarily, the petitioner's case is that under the provisions of theStamp Act a document cannot be said to be unstamped unless it comes within themischief of s. 15 of the Act and so the Board of Revenue was wrong in holdingthat the mortgage deed of March 22, 1957, could not be said to be properlystamped unless it bore stamps of the value of Rs. 1,74,000/- issued by theUttar Pradesh Government. The order was also challenged as illegal on theground that the petitioner had already paid stamp duty in West Bengal to theextent of Rs. 1,08,751/- 'after proper adjudication thereof by the Collectorof stamps, Calcutta, based on the provisions of a circular dated August 2,1954, issued by the State of West Bengal.' Rule 3 of the Stamp Rules asframed by the Uttar Pradesh Government (which provided that stamps overprintedwith the words 'Uttar Pradesh' or the letters 'U.P.') wasalso attacked as unconstitutional on the ground that it constituted anunreasonable restriction on the petitioner's fundamental rights under Art.19(1)(f) and 19(1)(f)(g) of the Constitution. Alternatively, it was contendedthat the circular of the West Bengal Government dated August 2, 1954 was nulland void and the State of West Bengal had 'illegally exacted the sum ofRs. 1,08,751/- from the petitioner without any authority of law in thatbehalf' and had infringed the fundamental rights of the petitioner underArt. 19(1)(f) and 19(1)(g) of the Constitution.
4. The petitioner asks for (i) a writ of certiorari for the quashing of theorder of the Board of Revenue dated August 11, 1961; (ii) a writ in the natureof mandamus directing respondents 3, 4 and 5, viz., Mr. Bhargava, Member, Boardof Revenue, Uttar Pradesh, the Board of Revenue, Uttar Pradesh and theCollector of Varanasi to forbear from acting on the basis of the order datedAugust 11, 1961; (iii) alternatively, a writ in the nature of mandamusdirecting the respondent No. 1, the State of West Bengal to refund to thepetitioner the sum of Rs. 1,08,751/-.
5. The petition was resisted by the State of West Bengal as also by theother respondents, i.e., the State of U.P. and its officers.
6. On behalf of the State of Uttar Pradesh it was urged that the Board'sorder dated August 11, 1961, was in accordance with law. It appears fromparagraph 19 of the counter-affidavit filed on behalf of the respondents 2 to 6that the document in question, i.e., the original mortgage deed dated March 22,1957, was impounded by the Inspector of Stamps on August 9, 1961.
7. The State of West Bengal denied that the circular dated August 2, 1954,was illegal and also that 'the State of West Bengal had illegally exactedthe sum of Rs. 1,08,751/- without authority of law.' In view of theimportance of the questions raised, notices were issued to all theAdvocates-General of the States and Advocates General of several Statesappeared before us through their Counsel.
8. The learned Solicitor-General, who appeared in support of the petitioner,did not press the contention against the State of West Bengal. The only pointseriously pressed by him was that on a proper interpretation of the provisionsof the Stamp Act and the Rules framed thereunder it would be wrong to hold thatthe document required to be stamped with the stamps purchased from U.P.Government. The learned Solicitor-General did not address us on the question asregards the amount of the stamp duty.
9. There cannot be any doubt that when it becomes necessary for any publicofficer of a State - using that word to mean an officer in charge of a publicoffice - to decide whether an instrument is or is not 'duly stamped'the law he has to apply is the Indian Stamp Act in the light of the appropriatemodifications made by the State Legislature. So, when the Uttar Pradesh publicofficers had to decide in the present case whether the original mortgage deedwas or was not 'duly stamped' they had to examine for the purpose theIndian Stamp Act as it stood after its amendment by the Uttar PradeshLegislature. Section 3 of the Stamp Act creates a liability for stamp duty.Section 3 after its amendment by the U.P. legislature stands thus :-
'3. Subject to theprovisions of this Act and the exemptions contained in Schedule I, thefollowing instruments shall be chargeable with duty of the amount indicated inthat Schedule as the proper duty therefor, respectively, that is to say :-
(a) every instrument mentionedin that schedule which, not having been previously executed by any person, isexecuted in the States on or after the first day of July, 1899;
(b) every bill of exchange(payable otherwise than on demand) or promissory note drawn or made of the Stateson or after that day and accepted or paid, or presented for acceptance orpayment or endorsed, transferred or otherwise negotiated, in the States; and
(c) every instrument (otherthan a bill of exchange, or promissory note) mentioned in that Schedule which,not having been previously executed by any person, is executed out of theStates on or after that day, relates to any property situate, or to any matteror thing done or to be done, in the States and is received in the States :-
Provided that, except asotherwise expressly provided in this Act, and notwithstanding anythingcontained in clauses (a), (b) and (c) of this section or in Schedule I or I-Athe following instruments shall subject to the exemptions contained in ScheduleI-A or I-B be chargeable with duty of the amount indicated in Schedule I-A orI-B as the proper duty therefor respectively, that is to say -
(aa) every instrument mentionedin Schedule I-A or I-B which not having been previously executed by any personwas executed in Uttar Pradesh -
(i) in the case of instrumentsmentioned in Schedule I-A on or after the date on which the U.P. Stamp(Amendment) Act, 1948, came into force, and
(ii) in the case of instrumentsmentioned in Schedule I-B on or after the date on which the U.P. Stamp(Amendment) Act, 1952, comes into force.
(bb) every instrument mentionedin Schedule I-A or I-B which not having been previously executed by any person,was executed out of Uttar Pradesh -
(i) in the case of instrumentsmentioned in Schedule I-A, on or after the date on which the U.P. Stamp(Amendment) Act, 1948, came into force, and
(ii) in the case of instrumentsmentioned in Schedule I-B on or after the date the U.P. Stamp (Amendment) Act,1952 comes into force, and relates to any property situated, or to any matteror thing done or to be done in Uttar Pradesh and is received in Uttar Pradesh :
Provided also that no dutyshall be chargeable in respect of -
(1) any instrument executed by,or on behalf of, or in favour of, the Government in cases where, but for thisexemption, the Government would be liable to pay the duty chargeable in respectof such instrument;
(2) any instrument for thesale, transfer or other disposition, either absolutely or by way of mortgage orotherwise, of any ship or vessel, or any part, interest, share or property ofor in any ship or vessel registered under the Merchant Shipping Act, 1894, orunder Art. XIX of 1838, or the Indian Registration of Ships Act, 1841, (X of1841), as amended by subsequent Acts.'
10. Another important change in the legal position was effected by framingrules under the Act. While s. 74 empowers the State Government to make rulesrelating to the sale of stamps, s. 75 empowers the Government generally to makerules 'to carry out generally the purposes of the Act.' Section 76provides that all rules made under the Act shall be published in the officialgazette and on such publication shall have effect as if enacted by the Act. Ofthe rules framed by the Uttar Pradesh Government it is necessary to consider inthe present case Rule 3 which is in these words :-
'3. Except as otherwiseprovided by the Stamp Act or by these rules -
(i) all duties with which anyinstrument is chargeable shall be paid, and such payment shall be indicated onsuch instrument, by means of stamp issued by the Government for the purposes ofthe Act, and
(ii) a stamp which by any wordor words on the face of it is appropriated to any particular kind of instrumentshall not be used for an instrument of any other kind.
(2) There shall be two kinds ofstamps for indicating the payment of duty with which instruments are chargeablenamely;
(a) impressed stampsoverprinted with the words 'Uttar Pradesh' or the letters'U.P.', and
(b) adhesive stamps overprintedwith letters 'U.P.';
11. Provided that the payment of stamp duty on instruments, executed in anypart of British India other than Uttar Pradesh and governed by S. 19-A of the saidAct, as amended in its application to the Uttar Pradesh, may be indicated bysuch stamps as may be prescribed for use in that part to the extent of the dutypayable there, the additional duty, if any chargeable in the Uttar Pradeshbeing paid by means of stamps prescribed in this rule. Sub-rule (2) of thisrule shall take effect from Ist April, 1942 :-
Provided further that all impressed and adhesive stampsfor indicating the payment of duty with which instruments are chargeable andwhich are not overprinted with the words 'Uttar Pradesh' or'U.P.' respectively, shall be consumed or exchanged at the treasuriesin Uttar Pradesh, provided that they are undamaged and unspoiled, withoverprinted stamps of the name and denomination and description before 1st April,1942, after which date the use or exchange of impressed and adhesive stamps notso overprinted, shall not be permissible, except to the extent indicated in thefirst proviso.'
12. The effect of s. 76 already mentioned above is that this rule operatesas a part of the stamp Act. In deciding whether the instrument had been dulystamped or not the public officer had to consider not only the provisions ofthe Act but also the provisions of the rules. The position that confronted theofficers may be summarised thus : The document had been executed in UttarPradesh. So, it became liable to pay duty under s. 3(aa) of the Act as amendedin Uttar Pradesh. Rule 3 required that the liability had to be discharged byusing stamps overprinted with the words 'Uttar Pradesh' or'U.P.'. The instrument did in fact bear stamps overprinted with thewords 'West Bengal' and not with the words 'Uttar Pradesh'or 'U.P.'. The public officer was therefore bound to hold that it hadnot been stamped in accordance with the law in force in Uttar Pradesh.
13. On behalf of the petitioner it is urged that even so the officer shouldhave held that the document was duly stamped. Reliance is placed for thiscontention on the definition of the words 'duly stamped' in s.(2)(ii) of the Act. The definition runs thus :-
'duly stamped' as applied to an instrumentmeans that the instrument bears an adhesive or impressed stamp of not less thanthe proper amount and that such stamp has been affixed or used in accordancewith the law for the time being in force in India.'
14. Leaving out of consideration for the present, the question of whatshould be the proper amount of the stamp, it is necessary to consider whetherwhen the officer found that the stamp had not been affixed or used 'inaccordance with the law for the time being in force in Uttar Pradesh' hewas entitled to say also that the stamp had not been affixed or used inaccordance with the law for the time being in force in 'India'. It ispointed out that like the Uttar Pradesh legislature the Bengal legislature hadalso amended the stamp law and framed its own rules. The amendment of s. 3 inBengal was by the addition of a proviso in these words :-
'Provided that, except asotherwise expressly provided in this Act, and notwithstanding anythingcontained in clause (a), (b) or (c) of this section or in Schedule 1, theamount indicated in Schedule 1-A to this Act shall, subject to the exemptionscontained in that Schedule, be the duty chargeable under this Act on thefollowing instruments, mentioned in clauses (aa) and (bb) of this proviso asthe proper duty therefor respectively,
(aa) every instrument,mentioned in Schedule 1-A as chargeable with duty under that Schedule, which,not having been previously executed by any person, is executed in Bengal on orafter the first day of April, 1922; and
(bb) every instrument mentionedin Schedule 1-A, as chargeable with duty under that Schedule, which, not havingbeen previously executed by any person, is executed out of Bengal on or afterthe first day of April, 1922, and relates to any property situated, or to anymatter or thing done or to be done in Bengal and is received in Bengal.'
15. The Bengal Government also framed rules under s. 76 which were dulypublished in the Gazette and on such publication became part of the Act. Rule 3of these rules, as it now stands requires that the duty payable must be paid bymeans of stamps overprinted with the words 'West Bengal.' Theinstrument in the present case is mentioned in Schedule 1-A of the Stamp Act asin force in West Bengal and though executed out of West Bengal it relates toproperty situated in West Bengal and was for the purposes of registrationreceived in West Bengal. It was therefore chargeable under s. 3(bb) of theStamp Act as in force in Bengal. This duty was paid by stamps overprinted withthe words 'West Bengal' in accordance with the stamp rules in forcein West Bengal. On behalf of the petitioner it is urged that the stamp law inforce in West Bengal was as much a law in force in India as the stamp Law inUttar Pradesh is the law in force in India. It is argued that in decidingwhether an instrument is 'duly stamped' within the meaning of theStamp Act it was necessary for the officer in Uttar Pradesh to ascertain thelaw in other parts of India also in order to decide whether or not'stamp' has been affixed or used in accordance with the law for thetime being in force in India.
16. It is next urged that when the officer finds that an instrument has beenstamped in accordance with the law in force in West Bengal he is bound to holdthat it has been stamped in accordance with the law for the time being in forcein India and thus 'duly stamped' within the meaning of the Stamp Act.
17. The problem is therefore reduced to this : Where an officer in UttarPradesh finds that an instrument has not been stamped in accordance with thelaw in force in Uttar Pradesh, how is he to proceed It is easy to see thatsimilar problems may arise before public officers of other States. Thus, anofficer in Bihar who has to decide whether a particular instrument has beenduly stamped, may find that it has been stamped in accordance with the law in forcein Madras but not in accordance with the law in force in Bihar. Should he holdthat the instrument has been duly stamped, in such circumstances ?
18. Primarily, the liability of an instrument to stamp duty arises onexecution. Execution in India itself made the instrument liable to stamp dutyunder s. 3(a) as it stood before the amendment. Under s. 3(c) execution out ofIndia, where the instrument relates to property situated or any matter or thingdone or to be done in India together with the further fact that the instrumentis received in India, made the instrument chargeable with duty. In amending toStamp Act what the State legislatures sub-stantially did was to treat theparticular State as equivalent to India. Thus, after the amendment by the U.P.legislature the position in law is that execution of an instrument in UttarPradesh is made the primary dutiable event and liability to stamp duty ariseson such execution. Apart from that, liability also arises where the instrumentthough executed out of Uttar Pradesh relates to property situated or any matteror thing done or to be done in Uttar Pradesh, and is received in Uttar Pradesh.It may be mentioned that the changes in the law made by the other Statelegislatures are exactly similar.
19. It is clear that in many cases the only one liability, viz., theliability on execution of the document will arise. After the amendment of theAct the liability can no longer be said to arise generally in India but must beheld to arise in the particular State where the instrument is executed. Itstands to reason that liability having arisen in a particular State it cannotbe held to be discharged in accordance with the law in force in India unless itis discharged in accordance with the law of the State where it arises. In otherwords, where the only liability of an instrument to stamp duty is the executionin Uttar Pradesh it must bear stamps of the amount and of the description asrequired by the law of Uttar Pradesh. If the liability of the instrument is onexecution in Bihar it must bear stamps of the amount and description requiredby the law in Bihar; and so in the case of every other State which has amendedthe Stamp law in the same manner as in Uttar Pradesh. In all these cases theinstrument can be said to be duly stamped only if it bears stamps of the amountand description in accordance with the law of the State concerned the lawincluding not only the Act but also the rules framed under the Act.
20. Some complications arise in the cases where both the liabilities arise -i.e., where the instrument is executed in one State but is related to propertysituated in or to things done or to be done in another State and is received inthe second State. In these cases the liability to stamp duty arises first underthe stamp law of the first State on account of the execution in that State; asecond liability arises under the law of the second State when the instrumentis received in that second State.
21. How is the liability to be discharged Has it to be discharged inaccordance with the law in force in the State where execution takes place or inaccordance with the law in force in the State where the second dutiable event,viz., the receipt in the second State occurred Obviously, an officer of thefirst State may reasonably think that it is the law of his State which mustprevail and so even if the document has been stamped in accordance with the lawof the other State he may ignore that stamping as not done in accordance withthe law in India and proceed to demand that it must bear stamps in accordancewith the law of his State. It was to avoid the hardships that may conceivablyresult from such a situation that the legislatures of different States enacteds. 19A of the Stamp Act. This section of the Uttar Pradesh Act runs thus :-
'19A. Where any instrumenthas become chargeable in any part of the States other than the Uttar Pradeshwith duty under this Act or under any other law for the time being in force inany part of the States and thereafter becomes, chargeable with a higher rate ofduty in the Uttar Pradesh under clause (bb) of the first proviso to section 3,then,
(i) notwithstanding anythingcontained in the first proviso to section 3 the amount of duty chargeable onsuch instrument shall be the amount chargeable on it under Schedule 1-A, orSchedule 1-B, less the amount of duty, if any, already paid on it in theStates; and
(ii) in addition to the stamps,if any, already affixed thereto, such instrument shall be stamped with thestamps necessary for the payment of the amount of duty chargeable on it under(1) in the same manner and at the same time and by the same persons as thoughsuch instrument where an instrument received in the States for the first timeat the time when it becomes chargeable with the higher duty.'
22. Therefore, where the rate of duty in Uttar Pradesh for an instrumentwhich becomes chargeable for stamp duty as mentioned above, (i.e., aninstrument executed out of Uttar Pradesh and relating to property situated orto any matter or thing done or to be done in Uttar Pradesh) with a higher rateor duty in Uttar Pradesh than in West Bengal, only the excess has to be paid inUttar Pradesh and it is only this excess which requires to be paid in UttarPradesh stamps. (Vide Rule 3 of the Uttar Pradesh Rules).
23. Section 19-A in terms applies only to an instrument which after becomingchargeable in any State outside Uttar Pradesh becomes chargeable in UttarPradesh with a higher rate of duty. It seems to us, however, that where therate of duty in Uttar Pradesh is the same or even lower, no further duty ispayable on such an instrument. For, it would be anomalous and unreasonable tohold that the legislature intended that though where a higher rate is payablein Uttar Pradesh the excess need only be paid, the Uttar Pradesh rate should bepaid in full where what has already been paid is the same or higher.
24. The result of this will be that if an instrument after becoming liableto duty in one State on execution there becomes liable to duty also in anotherState on receipt there, it must first be stamped in accordance with the law ofthe first State and it will not require to be further stamped in accordancewith the law of the second State when the rate of that second State is the sameor lower; and where the rate of the second State is higher, it will require tobe stamped only with the excess amount and that in accordance with the law andthe rules in force in the second State.
25. The mortgage deed which is the subject-matter of the present petitionwas executed in Uttar Pradesh, though it related to property situated in WestBengal and was received in that State for registration. The first dutiableevent was the execution, which took place in U.P.; the second dutiable eventwas the receipt in West Bengal. When it came before the officers of UttarPradesh for decision whether it was duly stamped or not, the officers of UttarPradesh were bound to hold - for the reasons we have discussed earlier - thatthe instrument was not duly stamped as it did not bear Uttar Pradesh stamps.The fact that the instrument had been stamped in accordance with the law ofWest Bengal could not justify a conclusion that it had been stamped inaccordance with the law in force in India. The Officers of the State of U.P.therefore rightly held that the original mortgage deed was not duly stamped.
26. The petitioners are not, therefore, entitled to any relief. In thecircumstances of the case, we order that the parties will bear their own costs.
27. Petition dismissed.