1. This is a petition under Article 226 of the Constitution praying that a writ of mandamus may issue to the Board of Revenue, the Chief Controlling Revenue authority of the State of Madras, to make a reference under Section 57 of the Indian Stamp Act.
2. The petitioners are financiers. They entered into an arrangement with the Punjab National Bank for advance of cash credit to a limit of Rs. 15 lakhs. A printed form of agreement was entered into and the agreement bore stamps to the value of only Rs. 1-8-0. As required by the Companies Act, the bank forwarded the agreement to the Registrar of Companies, and the Registrar forwarded it to the Collector of Madras for being validated under the Stamp Act. The Collector, in the exercise of his powers under the Stamp Act, impoundded the document and held that a deficit stamp duty of Rs. 4048-50 was payable. He also imposed a penalty of Rs. 100. The petitioners moved the Collector for revising the order, contending that the document was duly stamped according to law and that it could not fall under Article 5 of the Schedule to the Act. The Collector declined to revise his own order. Thereafter the petitioners moved the Board of Revenue by way of appeal. Finally the Board dismissed the appeal. The Board also purported to examine the question whether the case should be referred to the High Court Under Section 57 of the Stamp Act and considered that a reference was unnecessary.
3. It is stated in the affidavit accompanying the petition that the petitioners enter into hire purchase agreement with their customers for the sums advanced by them for purchase of motor cars, lorries etc., and they take, in addition to the hire-purchase agreements, promissory notes from the customers as a matter of security. These hire-purchase agreements and the promissory notes endorsed in blank by the petitioners were agreed to be deposited with the Punjab National Bank in accordance with clause 11 of the agreement. The contention of the petitioners is that in so far as these documents are concerned, which are the only ones so deposited with the bank, they could not be regarded as title deeds or instruments constituting or being evidence of title to property or as a pawn or pledge of moveable property. That being so, it is urged that Article 5 would not apply and that the Board in holding otherwise and further refusing to refer the matter to the High Court for its opinion has not properly understood the scope of the matter in dispute and the view taken by it is erroneous in law. It is in these circumstances that a writ of mandamus is prayed for.
4. The question before me is not whether the levy of stamp duty has been made under the proper Article relevant to the document. I am concerned more with the question whether this is proper case in which a writ should issue to direct the Chief Revenue Controlling Authority to state a case to the High Court. Under Section 56 of the Indian Stamp Act, the powers that are exercised by the Collector are in all cases subject to the control of the Chief Revenue Controlling Authority. Apparently, it is this provision that was relied upon for the purpose of sustaining the appeal that was filed to the Board of Revenue, against the order of the Collector in the present case. Subsection (2) of Section 56 states that if the Collector feels a doubt as to the amount of duty with which any instrument is chargeable, he may draw up a statement of the case and refer it with his own. opinion thereon for the decision of the Chief Controlling Revenue authority and that authority may render a decision and communicate it to the Collector. Section 57 provides for cases where either in a case referred to Under Section 56, Sub-section (2) or in any case which comes to the notice of the Board, it is competent for the Board to refer the case for the opinion of the High Court. The terms of the section are no doubt permissive only. It would be a proper construction of the section to hold that this section is intended to meet cases where there is some doubt as to the proper article that would apply to the instrument in question and there is also doubt as to the amount of stamp duty liable. In Chief Controlling Revenue Authority v. Maharashtra Sugar Mills Ltd., AIR 1950 SC 218, their Lordships had to deal with the scope of Section 57 of the Indian Stamp Act. The question was whether under that section there is an obligation upon the Chief Controlling Revenue authority to state a case and if not whether the High Court had jurisdiction to give a direction to that effect. This was a case before the Constitution of India came into force and, their Lordships had to consider whether in the terms of the Government of India Act, the High Court had the necessary jurisdiction in a matter relating to revenue. In that case, the matter had proceeded beyond the stage of assessment and had also reached the stage of recovery. It was argued that the word 'may' gave a discretion to the Chief Controlling Revenue Authority and that under Section 57 or any other section, no party had a right to insist on a reference. Their Lordships however repelled this contention and observed:
'It does not appear on principle sound to hold that these difficult questions should be left under the Stamp Art to the final decision of the appellant, and if the party affected by the assessment has a grievance, there is no relief at all in law for him. The construction of a document is not always an easy matter and on the ground that it is a substantial question of law, parties have been permitted to take the matter upto the highest Court. If so, it appears difficult to start with the assumption that because this is a revenue Act, the decision of the appellant should be considered final and conclusive......... In our opinion, the power contained in Section 57 is in the nature of an obligation or is coupled with an obligation and under the circumstances can be demanded to be used also by the parties affected by the assessment of the Stamp duty.'
In a case which arose after the Constitution came into force, the above decision of the Supreme Court was referred to as ample authority for the position that in an appropriate case this Court can and should issue a writ in the nature of a mandamus to direct the Board of Revenue to make a reference to the Court (see Shanmugha Mudaliar v. Board of Revenue, : AIR1955Mad304 ).
5. The question that I have to consider now is whether this is a proper case in which a writ of mandamus should issue and whether the point in controversy is a matter involving difficulty of construction of the document and of the application of the relevant provision of the Stamp Act thereto.
6. The document in question purports to be an agreement for cash credit and a maximum limit of advance of Rs. 15 lakhs is set therein. The principal clause of the document which would call for an interpretation leads thus:
'That the Borrowers do further agree and hereby given to the said Bank during the currency and for repayment of its dues, a general lien and right of set off and charge on all moveable property of every description coming into the possession of the said Bank on account of the Borrower or any one of them or for the time being held by the said Bank on behalf of the Borrowers or any one of them, whether alone or jointly with others in India or elsewhere including, without prejudice to his generality, any moneys, Bullion, deposit receipts for moneys, promissory notes, bills of exchange, hundies, stocks, goods and merchandise, bills of lading including railway receipts. Government bills with inspection notes and other bills in the course of collection, articles in safe custody and other documents of title to goods and any other negotiable or transferable instruments, or securities, instruments and documents of title and mercantile documents of every description, including hire-purchase agreements or contracts other than those affecting immoveable property and requiring registration under the Acts and Laws relating to registration and other documents evidencing the title of The Borrowers as creditors or members! of any Corporation, Association, Company or Syndicate in India and elsewhere.'
7. It is the contention of the petitioners in the present case that hire-purchase agreements are not documents of title or instruments evidencing title and would not come within the scope of the relevant provision. It is further contended that notwithstanding the comprehensive nature of this clause, the only documents that were deposited with the Punjab National Bank were the hire purchase agreements and the promissory notes offered as security by the customers of the petitioners. The petitioners claim that this is a met agreement which required a stamp duty of Rs. 1-8-0. The Collector however held that it, came within the description of an 'attested instrument evidencing an agreement relating to the hypothecation of moveable property where such hypothecation has been made by way of security for the repayment of money advanced or to be advanced by way of loan or of an existing or future debt.'
8. In the case of such a document, a notification of the Government of India dated 17th December 1938, reduced the duty leviable on such a document to 'the amount chargeable on an agreement relating to a deposit of title deeds, pawn or pledge under Article 5 of Schedule I-A of the Stamp Act..........'
9. Turning to this Article (it is now Article 6 as amended), the Collector took the view that the amount of stamp duty had to be calculated as provided thereunder. Mr. Champakesa Aiyangar, for the petitioners, claims that Article 6 which describes the instrument as 'an agreement relating to the pledge of title deeds, pawn or pledge......' does not apply and the document in question cannot be brought within the scope of this description. This argument to my mind is clearly erroneous. What the Government notification provided was that where an attested instrument which evidences an agreement relating to hypothecation of moveable property was concerned, the stamp duty payable thereon was reduced to that provided in respect of an agreement set out in Article 6 of Schedule I-A. It is not necessary that the instrument in question should conform to the description of the instrument in that article. The question for consideration would be whether the instrument was attested, whether it evidences an agreement relating to hypothecation of moveable property and whether such hypothecation is by way of security for repayment of money either advanced or to be advanced. If the document complies with the above requirements, the notification referred to would appear to treat it as liable to duty as provided in Article 6 of Schedule I-A.
10. The contention of the learned counsel for the petitioners is further that there is no hypothecation of any moveable property, that the mere deposit of the hire-purchase agreements and the promissory notes endorsed in blank in favour of the Punjab National Bank will not bring them within the scope of either the entry in the notification or the article in Schedule I-A. Here is undoubtedly a case calling for an interpretation of tile recitals contained in a document, the proper construction of which would lay the burden of a higher or lower incidence of duty under the Indian Stamp Act. While it may no doubt be that the Collector and the Board reached the correct conclusion in the matter, it does not in the circumstances of the case absolve the Chief Controlling Revenue Authority from the duty of referring the matter to the High Court. It seems therefore that this is a proper case in which a reference should have been made.
11. A writ of Mandamus will accordingly issue. There will however be no order as to costs in this petition.